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Q-Cells Falls to Record as Company to File for Insolvency

Q-Cells SE (QCE), once the world’s largest solar-cell maker, fell to a record low in Frankfurt trading before the German company said it will file for insolvency as soon as tomorrow.

Q-Cells tumbled 41 percent to 13 euro cents as of the close of trading in Frankfurt. The manufacturer held its initial public offering in October 2005, when the shares sold at 38 euros apiece.

The stock has plunged 77 percent this year as Q-Cells worked to reorganize debt while Germany’s government reduces solar subsidies and the industry fights overcapacity. Solarworld AG and Conergy AG are also struggling with competition from Chinese companies led by Suntech Power Holdings Co. that have expanded capacity, creating a glut in solar panels.

A court ruling on a separate company’s restructuring set a precedent that makes the overhaul of Q-Cells unfeasible, the Bitterfeld-Wolfen solar-panel maker said in a statement today.

“After considering several alternative concepts to implement the debt restructuring, management is convinced that the company faces too many legal risks,” Q-Cells said. “We are legally bound to file for insolvency.”

Q-Cells based its decision on a ruling in late March by the Frankfurt Higher Regional Court that required Pfleiderer AG (PFD4), a wood processing company, to seek unanimous agreement from creditors to a debt restructuring. Until that court decision, Q- Cells had planned to restructure its debt based on approval by a majority of creditors.

Q-Cells, which said on March 30 that it was exploring alternatives to the plan after reaching agreements with its main bondholders and authorities in Malaysia and Germany, also said today its board no longer sees the company as a going concern.

‘Strong Brand in Europe’

“At continuously low prices of photovoltaic cells, currently at $0.51 a watt, most manufacturers are bleeding out of cash and Q-Cells has largely depleted its options as the market is not showing signs of recovery anytime soon,” Martin Simonek, an analyst at London-based Bloomberg New Energy Finance, said.

“However, Q-Cells still has something that many Asian companies don’t; a strong brand in Europe,” he said today. “This could play a role, once the price is right.”

It doesn’t make sense for an industry insider to buy Q- Cells, Alla Gorelova, an analyst at Steubing AG in Frankfurt, said by phone. The larger manufacturers already have enough capacity and the smaller ones don’t have the cash, she said.

“If anything then it’s probably going to be a complete outsider, or an outsider with some existing activities in the solar market,” Gorelova said today. The company’s operations in Malaysia and to an extent, their project business, could be of value, she said.

“Q-Cells European module capacity might become of value in the future due to its location.”

To contact the reporter on this story: Annette Weisbach in Frankfurt at aweisbach1@bloomberg.net; Louise Downing in London at Ldowning4@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net

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