Conergy files for insolvency as solar crisis deepens
FRANKFURT (Reuters) - German solar group Conergy (CGYGk.DE) has filed for insolvency, putting about 800 jobs at risk and becoming the latest casualty in an industry battered by overcapacity, plunging prices and a trade dispute between Europe and China.
Once Europe's largest solar company, Conergy has been fighting for months to secure fresh investment and a deal with its creditors, and earlier this week it had looked close to an agreement.
But on Friday it ran out of time, saying it had not been able to win over one of its 10 creditors and that two of its subsidiaries were insolvent, essentially meaning they had run out of money. A district court will now appoint an administrator, who will try to rescue the business.
"This is a clear sign of how huge the crisis was and still is," said Holger Fechner, analyst at NordLB bank.
Four people familiar with the matter said EAA ERSAB.UL, a so-called "bad bank" tasked with taking care of toxic assets from wound-down public-sector lender WestLB, was the creditor that opposed Conergy's proposed restructuring deal.
EAA and Conergy declined to comment.
Rising demand and government subsidies for renewable energy stoked a boom for solar power last decade that turned small start-ups into global giants almost overnight.
But while the demand is still there, some of the subsidies are not as cash-strapped governments cut back. The industry also attracted a wave of new entrants that sent prices plunging and felled a string of top players including U.S.-based Solyndra, as well as Germany's Q-Cells QCEG.UL and Solon (SOOG.MU).
China in particular ramped up production and exports of solar panels and related products, sparking a trade dispute that has seen the European Union slap duties on Chinese imports and Beijing respond with a probe into imports of European wine.
On Friday, there were signs tensions might be thawing, with people familiar with the matter saying China and the EU were moving towards a deal to defuse the conflict.
"In the last fifteen months, we have presented two concrete concepts on the investment by investors to our lenders," Conergy Chief Executive Philip Comberg said.
"We very much regret that they repeatedly could not reach a reliable agreement on a timely implementation of the proposal."
A spokeswoman for the Conergy, in which Deutsche Bank (DBKGn.DE) holds a 9.9 percent stake, said about 800 of the company's 1,100 employees were affected by the insolvency filing, without giving more details.
Sources close to the matter told Reuters on Monday that the firm was close to striking a deal for an unidentified Asian investor to take a big stake in the firm.
The deal would have seen the investor taking a 261.5 million euro ($338 million) syndicated loan agreement closed by Conergy and 10 banks - led by Commerzbank (CBKG.DE) - in 2011, and pumping 50 million of equity into the group.
Conergy, which makes components such as solar panels and inverters and also plans, finances and operates solar parks, said it was still optimistic of "achieving a continuation of the whole business operations in the context of insolvency proceedings by means of an investor".
Despite the industry's problems with oversupply, solar parks remain in demand from insurers, utilities and financial investors who have discovered them as an asset class, benefiting from guaranteed state subsidies over a fixed period of time.
Conergy had sales of 473.5 million euros last year, but an operating loss of 83 million. During the peak of the solar boom in 2007, its market capitalization was more than 2.2 billion euros. At 9.10 a.m. ET, its shares were down 67 percent at 0.118 euros, valuing the business at about 20 million euros.
($1 = 0.7744 euros)
(Additional reporting by Matthias Inverardi in Duesseldorf and Alexander Huebner in Frankfurt; Editing by Victoria Bryan and Mark Potter)
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