Policy & Market


Update: Germany's fallen PV star Q-Cells to file for insolvency

Q-Cells intends to file for insolvency proceedings on Tuesday (3 April), after the German PV group formally acknowledged that it is no longer possible to escape the noose that has been tightening around its neck for several years.

The final straw for the company – the world’s largest maker of PV cells only a few years ago – came in the form of a ruling in Frankfurt’s Higher Regional Court against Pfleiderer, a totally unrelated company that makes building materials.

Pfleiderer intended to force its bondholders to trade the debt they hold in the company for an equity stake. In February, Q-Cells outlined plans for its own debt-for-equity swap affecting holders of bonds due to mature in 2012, 2014 and 2015.

But the court ruled that bonds issued under a foreign jurisdiction are not governed by German law, with the implication being that all of Q-Cells’ creditors would have to agree to the swap – as opposed to a simple majority.

Q-Cells says it is “convinced” that the court’s ruling is incorrect. “However, potential lawsuits against Q-Cells’ restructuring plan – which are to be expected – would be handled by the same court.

“There is no reason to assume that the court would change its view on this matter,” it admits.

After reviewing “alternative concepts” for reducing its debt, the executive board concluded that “a going concern cannot be secured on a sufficiently secure legal basis".

The board adds that it will work with the preliminary insolvency administrator to “secure the continuity of the company”.

Q-Cells has long acknowledged being open to a takeover, but no such candidate has emerged.

The insolvency comes just three weeks after Q-Cells was ejected from Germany’s TecDAX stock index, and caps a stunning fall from grace for a company that has come to define both the rise and decline of Germany’s PV manufacturing sector.

Q-Cells was founded in 1999, went public in October 2005, and ended 2006 with a market capitalisation of €2.54bn – by far the largest within the TecDAX, which tracks the 30 largest technology companies listed on the Frankfurt Stock Exchange.

Since Q-Cells challenges were first revealed several years ago – sparked by Spain’s decision to retroactively cut into its feed-in tariff, and grossly exacerbated by the rise of Asian manufacturers – the company has taken extraordinary steps to regain a semblance of competitiveness.

In addition to opening a vast factory in Malaysia – where more than half of its production took place last year – it has also aggressively expanded its downstream presence in project development, and continues to grow shipments of its thin-film subsidiary Solibro.

Q-Cells shares, which were already down sharply on speculation the company would file for insolvency, plunged even further after the announcement was made official.

The shares ended Monday down nearly 41% at €0.126, by far the lowest price since the company went public in 2005.

The insolvency will further stoke fears that Germany’s entire PV manufacturing sector is being systematically gutted, in part by repeated reductions of the country’s feed-in tariff.