Q-Cells SE Plans Financial Restructuring
Q-Cells SE plans a restructuring of its financial
liabilities in two steps. After intensive negotiations with different creditor
groups, the Company initially aims to come to an agreement with the holders of
the convertible bond due at the end of February 2012. This agreement will
provide among others for a partial repayment of the outstanding bond volume in
tranches over a period of time. In a second step, and in due course, the
convertible bonds due in 2014 and 2015 shall be restructured via a
debt-to-equity swap.
The Frankfurt Regional Court ruled on Monday, 23 January
that the new bond law from 2009 does not apply to the bond issued by Q-Cells
International Finance B.V. due at the end of February 2012. Thus, the
appointment of a joint representative who could have deferred the convertible
bond maturing in 2012 by order of the creditors is not legally effective. The
Company will appeal against this decision of the Frankfurt Regional Court at
the Frankfurt Higher Regional Court, in order to ensure it retains the option
of a deferral as per the bond law.
With regard to the uncertainty of a ruling by the Frankfurt
Higher Regional Court in time, it will probably be necessary to reach
individual agreements with the creditors of the bond due at the end of February
2012. The Company plans to shortly make a public offer to those bondholders.
On the basis of the medium-term business plan which was
updated at the end of 2011, Q-Cells also revalued the carrying amount of
investments of its subsidiaries as well as property, plant and equipment. This
revaluation resulted in a loss in the individual financial statement of Q-Cells
SE in accordance with 2 German GAAP(HGB), i.e. that losses occurred of more than
half of the subscribed capital as per 31 December 2011. Negative equity was
recognised in the HGB individual financial statement of Q-Cells SE as of that
balance sheet date. The final annual loss does not stand firm yet.
In accordance with section 9 (1c) lit. ii) of the SE
Regulation in conjunction with section 92 (1) of the German Stock Corporation
Act (AktG), the Company has a statutory duty to provide information on this
reduction in equity and promptly invite the shareholders to an Extraordinary
General Meeting. The invitation will be published in the coming days together
with the agenda.
The value adjustments on the balance sheet in accordance
with HGB, however, are non-cash effective and do not have a direct effect on
the Company's liquidity. Business in the fourth quarter of 2011 is in line with
expectations. The revenues forecast for the past financial year (around € 1
billion) has been confirmed and the liquidity forecast (up to € 300 million)
has been slightly exceeded at € 304 million.
Business plan foresees mid-term profitability
The business plan of Q-Cells, validated by the management
consultancy McKinsey, expects further losses in the challenging financial year
2012. Revenues are set to reach € 865 million, EBITDA before restructuring
costs are to amount to € -14 million and EBIT before restructuring costs is to
reach € -90 million. A fundamental precondition for generating profits based on
the mid-term business plan, is a timely implementation of the financial
restructuring of all three outstanding convertible bonds. Moreover, the review
assumes that at least cost leaders can earn their cost of capital and return to
acceptable margin levels. Yet, ongoing price wars could interfere with a price
premium strategy. Based on these assumptions, Q-Cells expects to generate a
positive EBITDA to the amount of € 61 million in 2013 and a positive operating
income (EBIT) of € 8 million in 2014.