Solarworld Proposes Debt-to-Equity Swap After 2012 Loss Widens

Solarworld AG made a preliminary agreement with most of its creditors that will allow Germany’s biggest maker of solar panels to reduce its noncurrent liabilities by about 60 percent.

Solarworld will propose a capital reduction of about 95 percent, combined with a capital increase against contribution in kind to an extraordinary shareholders meeting, the Bonn-based company said today in a statement today. The preliminary deal was struck with creditors representing about 80 percent of loans, it said.

As part of the capital increase, about 60 percent of liabilities will be discharged by a debt-to-equity-swap, Solarworld said. The deal is subject to the approval of committees, it said.

“For the company and employees it’s good news that a solution has been found for at least a part of its debt pie,” Stefan Freudenreich, an analyst at Equinet Bank AG in Frankfurt, said by phone. “For current equity holders it’s bad news as they will loose almost everything.”

Solarworld, which yesterday said its 2012 net loss widened 55 percent to 476.9 million euros ($624 million), is among companies battling competition mainly from Chinese producers that saw solar panel prices drop by half in 2011 and another 24 percent last year. That tipped more than a dozen German businesses including Solar Millennium AG and Q-Cells SE, once the largest solar-cell maker, into bankruptcy.

The shares gained as much as 6.1 percent after the restructuring announcement before retreating 2.4 percent to 69 euro cents at 12:49 p.m. in Frankfurt. They’ve slumped 49 percent in six months.

Solarworld has 150 million euros of bonds maturing in 2016 and 400 million euros worth due in 2017, according to data compiled by Bloomberg.

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