Analysts size up SolarWorld's uncertain future
By Erik Siemers
SolarWorld's cloudy financial situation has some analysts speculating it could be curtains for the company — the most drastic of a range of scenarios that could play out.
SolarWorld AG argues that its panels are the best on the market. That of all the workhorse, everyday-use solar panels out there, its are the most efficient. And the company has invested another $33 million in its Hillsboro factory to ensure it stays that way.
Yet as the German panel-maker seeks for the second time in less than a year to restructure its $537 million mound of bond debt, the company contends that the problem is the market, not its products or business structure. Its bonds due in 2017 are now worth less than 30 cents on the dollar.
While solar panel manufacturers worldwide are losing money, the industry suffers from production capacity that far outstrips demand, and from cut-rate pricing that SolarWorld and some of its contemporaries say is the result of Chinese scheming.
Yet analysts say that even if SolarWorld — whose 1,000-person workforce in Hillsboro will shrink to 725 by March — succeeds in restructuring its debt, its fate is far from certain.
Here are four possible outcomes for SolarWorld and its Hillsboro factory based on conversations with analysts:
1) SolarWorld restructures its debt, continues operations
Erkan Aycicek, an analyst at Landesbank Baden-Wuerttemberg, told Bloomberg last week that if SolarWorld fails to restructure its debt it won’t be able to continue operating.
But at the same time, Aycicek said he believes the company’s creditors will be open to the restructuring.
“If they weren’t able to do that, then existing bondholders might be left with nothing,” said Shyam Mehta, senior solar analyst with GTM Research. “By pushing things off, they would at least be giving themselves a chance to recover some of the money they’re owed.”
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