Meyer Burger announces comprehensive recapitalisation programme to redeem straight bond due in 2017 and to strengthen its capital structure
Meyer Burger announces comprehensive recapitalisation programme to redeem straight bond due in 2017 and to strengthen its capital structure. Contract of Euro 67 million for large project signed.
- Comprehensive plan to recapitalise the company including amendment of terms of outstanding convertible bond, share capital increase and extension of existing bank credits
- Planned adjustment of terms of outstanding convertible bond, amongst others by removing the bondholder put option exercisable in September 2018.
- Strengthening of balance sheet and liquidity through planned capital increase of about CHF 160 million
- Banking consortium agrees in principle to extend the loan secured by mortgage certificates on the building in Thun of CHF 30 million and the guarantee limit of now CHF 60 million by 3 years each
- Incoming orders of CHF 358.5 million for the first nine months 2016, +15% compared to the respective reporting period 2015
- Net sales increase of +97% to CHF 336.1 million and positive EBITDA of CHF 13.9 million reached for the first nine months 2016
- Already announced structural programme to increase profitability will reduce, at unchanged level of net sales, the total annual operating costs by about CHF 50 million. This results in a breakeven level at EBITDA with net sales volume of about CHF 300 million as of 2018
- Contract of about Euro 67 million signed for large photovoltaic project in Turkey for the production of heterojunction solar modules
- Outlook: Meyer Burger expects net sales of CHF 420-450 million and EBITDA of about CHF 10-20 million for fiscal year 2016
Meyer Burger Technology Ltd (SIX Swiss Exchange: MBTN) was able to continue the favourable trend in incoming orders and the strong sales growth from the first half of 2016 also in the third quarter. According to preliminary unaudited results for the first nine months of 2016, the company achieved an increase in incoming orders of +15% to CHF 358.5 million (9M 2015: CHF 310.7 million) and net sales growth of +97% to CHF 336.1 million (9M 2015: CHF 170.3 million). The result at EBITDA level is expected to be CHF +13.9 million for the period ending 30 September 2016 (9M 2015: CHF -67.2 million) and the net result CHF -40.3 million (9M 2015: CHF -138.8 million). At balance sheet date 30 September 2016, cash and cash equivalents were CHF 88.1 million, equity CHF 135.5 million and the equity ratio 24.7%. The structural programme announced on 29 September 2016 is being implemented efficiently and will reduce, at unchanged level of net sales, the company’s total annual operating cost base by about CHF 50 million. A major portion of the planned cost reductions will become effective at the beginning of 2017, with the remaining part being effective as of the second half of 2017. Therefore, the break-even level at EBITDA shall be reduced to a net sales volume of about CHF 300 million as of 2018. In addition, the company’s cost structure will become more flexible, and higher production volumes will continue to be managed through the use of temporary staff.
Comprehensive programme to strengthen the capital structure
The recapitalisation programme announced today consists of three pillars and is aimed at strengthening the company’s capital structure and providing a solid financial base for future profitability and growth of the Meyer Burger Group. Furthermore, it provides a path for a sustainable deleveraging until the potential redemption of the convertible bond in 2020.
The first pillar to strengthen the capital structure is a planned adjustment of the terms of the outstanding convertible bond due 2020. The CHF 100 million convertible bond was issued in September 2014 with a coupon of 4% per annum and a contractual maturity on 24 September 2020. The terms of the convertible bond include an investor put option, which entitles the bondholders to require the company to redeem the bonds held by such bondholders at the principal amount on 24 September 2018. The Board of Directors proposes to the bondholders to remove this put option in exchange of a higher coupon and a reduced conversion price. The details for the new terms of the convertible bond will be announced together with the invitation to a corresponding bondholders’ meeting. Several large convertible bondholders, among them Veraison Capital AG, have already voiced in principle their support of the proposed adjustment of the contemplated amended terms of the convertible bond in connection with the recapitalisation programme.
The second pillar to strengthen the capital structure consists of a planned share capital increase. The Board of Directors plans to propose to the company’s shareholders an ordinary capital increase with tradeable pre-emptive rights of existing shareholders (the new shares will be issued at a discount to the share price), in order to sustainably strengthen the capital base and secure the redemption of the CHF 130 million straight bond which matures on 24 May 2017. The capital increase shall amount to about CHF 160 million. The Board of Directors plans to convene an Extraordinary Shareholders Meeting shortly, to have the planned share capital increase approved by the shareholders. In addition, the Extraordinary Shareholders Meeting will also be asked to approve an increase of the existing conditional capital for the exercising of conversion and/or option rights in connection with convertible bonds, bonds with option rights or other financial instruments in order to secure future conversion of the convertible bond even after an adjustment of the conversion price.
The third pillar of the recapitalisation programme is an extension of the maturity of the loan secured by mortgage certificates of CHF 30 million on the building in Thun. The loan would mature in April 2017, but will be extended by three years. Simultaneously, the guarantee limit under the syndicated loan agreement will, in line with the company’s needs, be adapted to CHF 60 million and will also be extended by three years. A banking consortium has assured the extensions of these two credit facilities.
The three pillars of the recapitalisation programme will be inter-conditional, i.e. the change of the terms of the convertible bond and the willingness of the banks to extend the maturities of the credit contracts will be conditional upon the increase of the company’s share capital. On the other hand, the company’s share capital increase will be conditional upon the approval by the bondholders to change the terms of the convertible bond as well as on the extension of the maturities of the credit contracts. The Board of Directors is convinced that a swift and successful implementation of the comprehensive recapitalisation programme will provide the company with the required financial strength and flexibility, to profit from the growth opportunities in the solar industry, on the basis of a competitive cost structure, which is in the best interest of all stakeholders.
Meyer Burger collaborates with Credit Suisse and UBS in conjunction with the recapitalisation programme.
Contract of Euro 67 million signed for large photovoltaic project in Turkey
Meyer Burger has signed a large contract for a photovoltaic project in Turkey. The contract includes delivery of cutting-edge technologies and equipment for the production of high-efficiency and high-quality solar wafers, cells and modules. The total contract volume amounts to about Euro 67 million and includes equipment, systems and software for production control (MES) along the entire PV value chain as well as the on-site training of operators to ensure the production of high-efficiency solar modules. The customer will use Meyer Burger’s diamond wire cutting systems for the wafering process, high-efficiency Heterojunction HJT solar cell coating technology and high-performance SmartWire Connection technology for the connection and encapsulation of the solar modules. The annual production capacity for the first phase of this project will be about 200 MW. Supported by the Meyer Burger equipment, the customer plans to achieve a total production capacity of about 1GW in the next 5 years. This contract represents an important step towards reaching this target. The customer prepayment for this contract is expected to be received during the first quarter 2017. The order will be reflected in the incoming orders, once the prepayment has taken place. Delivery of the contract equipment is expected as of the third quarter of 2017. The customer plans to start production by the first quarter 2018.
Outlook for full year 2016
For the entire fiscal year 2016, Meyer Burger expects to achieve net sales in a range of CHF 420-450 million and a positive EBITDA of about CHF 10-20 million. The comprehensive structural programme announced on 29 September 2016 is being carried out efficiently and shall reduce, at unchanged level of net sales, the company’s current annual operating cost base by about CHF 50 million (therefore the breakeven level at EBITDA will be reduced to a net sales volume of about CHF 300 million as of 2018). The extraordinary costs in conjunction with the structural programme will amount to about CHF 3-4 million and be charged as non-recurring expenses to the full-year financial statements 2016 in the fourth quarter of the year.