Bondholders of Q-Cells to take 95% ownership of the company

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A debt-to-equity swap deal between Q-Cells and its bondholders has been agreed in principle, a situation that will result in the company's being majority owned (95%) by the bondholders. In return, Q-Cells would be virtually debt-free and retain the €304 million of liquidity the company had at the end of 2011 to continue to restructure and continue operations. Q-Cells will also sell further non-core assets that could raise €200 million, which would be given back to the 2012, 2014 and 2015 bondholders on an equal basis.

The implementation of the agreement requires the approval of the bondholders, the shareholders of Q-Cells SE and the involved authorities. An extraordinary general meeting has already been scheduled. The company noted that subject to approval the implementation of the planned financial restructuring would take place in the second half of 2012.

Q-Cells noted that being almost debt free would put the company in a “unique position for Q-Cells to act as a competitive, technologically leading, premium player.”

Bondholders seem to have realised that without a debt-to-equity swap, Q-Cells' ability to operate was a growing concern and that an asset sale would not be sufficient to recoup investments.

Q-Cells noted that a review of its business plans had been conducted by bondholders, suggesting that with current liquidity and little debt, the company would be able to ride out the current market challenges and restructure the company for growth in the future, potentially securing financial returns for bondholders rather than certain losses.

The sale of assets to potentially repay €200 million to all bondholders equally raises the possibility that Q-Cells' thin-film business could be up for sale. 

The two-step debt restructuring plan, previously announced by Q-Cells, was not accepted by bondholders, suggesting the risks of the company folding remain high. 

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