SAG Solarstrom files for insolvency

Freiburg-based SAG Solarstrom will file for insolvency today after refinancing negotiations by the loss-making solar developer with banks, creditors and investors failed.

It is the latest in a series of insolvencies in the once-mighty German solar industry, which in large parts has not been able to withstand the pressure of cheap Chinese competition.

After the failure of the refinancing talks, the company says it sees no option for implementing a short-term financial restructuring outside of insolvency proceedings, and won’t make any interest payments on 16 December for its 2010/2015 bond.

The insolvency comes a week after the company admitted that negotiations regarding its near-term project pipeline have fallen through.

“On 18 November 2013, it became apparent that a cash inflow expected in November in the mid-single-digit million Euro range would probably only be received during the course of 2014,” Solarstrom says in an ad-hoc filing to stock markets.

“The reason for this is that the closing of the sale of an Italian system portfolio cannot currently take place due to a legal dispute with the network operator."

The company now expects to receive the payment from the Italian project company at the earliest by the end of the first quarter of 2014. Together with other delays in cash inflows from sales in Germany, that led to liquidity shortfalls that couldn’t be covered any further.

Solarstrom is planning a self-administration of the insolvency proceedings, a procedure in German bankruptcy legislation similar to the US chapter 11 rule that temporarily grants the company creditor protection.

The company will work on a recovery plan over the next three months.