19/04/2013 18:02:00

Germany's Solarworld Working on Qatari-Backed Rescue Plan-Sources

By Hendrik Varnholt and Eyk Henning

FRANKFURT--Troubled German solar company Solarworld AG (SWV.XE) is working on a plan in which current creditors will take over the company almost entirely in a debt-to-equity swap backed by a Qatari investor, three people familiar with the negotiations said Friday.

Under the plan, the company's shareholders will likely end up with a less than 5% stake in Solarworld, while creditors will take the majority, roll parts of their debt into longer dated maturities and/or forego on parts of their claims in a so called 'haircut', these people say. An agreement could be reached by mid-May, one of the sources said.

In one of the scenarios discussed, creditors would be paid out around 7% in cash over the next two years and would prolong the maturity of around one third of the debt outstanding, two of these people say, adding that the remainder would be swapped into equity.

It also foresees that a Qatari investor, which backs a silicon joint venture between The Qatar Foundation and Solarworld, will provide either fresh equity or guarantees for the part of the debt to be prolonged, these people say.

Up to EUR200 million would be needed to secure the prolonged debt, an institutional bondholder said, adding that Solarworld's creditors mandated Macquarie Group to help with the restructuring. Solarworld wasn't immediately available for a statement and Macquarie declined to comment.

German solar companies, once a showcase industry in the global renewable energies sector, were hit hard by the rise of Asian competitors that built up massive production capacities over the past few years.

The resulting global overcapacities triggered plummeting prices for solar panels that resulted in significant revenue declines for the component makers. The pressure on the industry was exacerbated by subsidy cuts across Europe, making solar projects less attractive.

Germany based Q-Cells, once the world's biggest solar-cell maker, filed for insolvency last year before South Korean industrial conglomerate Hanwha Corp. (000880.SE) snapped up the company.

Write to Eyk Henning at eyk.henning@wsj.com

(END) Dow Jones Newswires

April 19, 2013 13:02 ET (17:02 GMT)

Copyright (c) 2013 Dow Jones & Company, Inc.

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