Solarworld Drops to Nine-Year Low on 2012 Loss: Frankfurt Mover

Solarworld AG, Germany’s biggest solar-panel maker, fell to a nine-year low in Frankfurt after estimating a loss equivalent to half of its share capital.

Solarworld, based in Bonn, declined 27 percent to 67 euro cents by the close, the lowest level since December 2003, after saying it sees a 2012 net loss of 520 million euros ($678 million) to 550 million euros under local accounting rules. The loss was mainly from writedowns on stakes in and loans to units and affiliates. Equity capital will be about minus 20 million euros to minus 50 million euros, it said in a statement.

“This news puts the share price under pressure after it had been surprisingly high in recent weeks,” according to Stefan Freudenreich, an Equinet Bank AG analyst who recommends selling the shares. “While the losses are no huge surprise, it remains unclear how the debt talks are proceeding, which makes it very hard to predict Solarworld’s future,” he said by phone.

Solarworld is planning an extraordinary shareholder meeting on the losses unveiled late yesterday after last month delaying its 2012 financial report amid continuing talks with creditors.

Competition from Chinese companies cut solar panel prices in half in 2011 and another 24 percent last year. That tipped more than a dozen German companies including Solar Millennium AG and Q-Cells, once the largest maker of power-generating cells, into bankruptcy. China’s Suntech Power Holdings Co., the one-time world’s largest panel maker, fell into insolvency days after it defaulted on a $541 million debt repayment in March.

Raising Funds

“Besides restructuring and massively reducing its debt, Solarworld will have to raise at least 150 million euros in order to keep up operations throughout 2013,” Bankhaus Lampe KG said today in an e-mailed research note. “We have a hard time seeing how Solarworld can accomplish the tasks at hand.”

The producer, after saying in January it needed “serious adjustments” to its debt structure, has lost money in four of the past five quarters and reported net debt of 805.2 million euros at the end of September. It has 150 million euros of bonds due in 2016 and 400 million euros of bonds due in 2017, according to data compiled by Bloomberg.

“It’s not at all unlikely that Solarworld will find an agreement with its creditors,” Freudenreich said. “Solarworld’s assets are worth very little, so if the creditors let Solarworld go bankrupt, they would get next to nothing.”