Shareholders of Germany’s SolarWorld overwhelmingly approved a debt-for-equity plan that company executives hope will save the financially strapped photovoltaics manufacturer from insolvency.
At an extraordinary general meeting in Bonn on Wednesday, more than 91% of SolarWorld’s shareholders agreed to implement capital measures to restructure the companys financial position and balance sheet. Earlier this week creditors also approved the measures, with more than 99% noteholders of two separate bonds accepting the proposed deal, paving the way for the company’s restructuring.
The debt-for-equity swap would give creditors a majority stake in the business while leaving existing shareholders with the loss of nearly their entire share. The move is expected to reduce the groups debt from the current 900 million to 400 million.
The plan will cut SolarWorlds debt by about 55% by converting the liabilities into shares and also include a capital reduction by the ration of 150 to 1 followed by an issuance of new shares.
SolarWorld announced in June that Qatar Solar S.P.C. of Doha, Qatar, and SolarWorld Chairman and CEO Frank Asbeck intend to purchase SolarWorld’s new share capital. As a new investor, Qatar Solar is expected to acquire a 29% stake in the company. Through private investment, Asbeck will acquire a 19.5% stake. Existing shareholders will retain a 5% holding following implementation of the capital increase.
Asbeck, whose post was extended to 2019, said: "Our restructuring concept has been accepted by an overwhelming majority of all parties. Thanks to the decisions of noteholders and shareholders, SolarWorld will stand on a stable financial foundation again. We will now implement the approved measures with due care as quickly as possible."
SolarWorld’s management board expects the debt-restructuring resolutions to be carried out between November and February.
Analyst Götz Fischbeck of German bank Bankhaus Lampe told pv magazine that the shareholders’ approval was only the first step in the companys long-term recovery.
Fischbeck says to insure its future success, the company will have to lower its manufacturing costs and get out of its high-priced, long-term silicon contracts.
"SolarWorld has averted an imminent insolvency and secured time until Christmas. But the company is not off the hook yet," said Fischbeck, who added the debt cut provided only a temporary reprieve. Indeed, while SolarWorld is cutting its debt by 55%, it will still have to deal with 400 million in liabilities plus a further 90 million loan repayment next year.
The integrated photovoltaics manufacturer is not planning to alter its business model any time soon but Fischbeck is adamant that the company, which operates production facilities in Germany and the U.S., will have to lower its manufacturing costs, which remain too high.