A1YCN1 / WKN: A1YDDX) – Information on the status of the insolvency proceedings of SolarWorld Aktiengesellschaft

Information on the status of the insolvency proceedings of SolarWorld Aktiengesellschaft

Introduction

1. This notice is issued by the joint representatives of the two notes of SolarWorld AG (the "Issuer" or "SWAG")

• 2014/2019 (WKN A1YDDX / ISIN DE000A1YDDX6) ("2018-1 Notes") and
• 2014/2019 (WKN A1YCN1 / ISIN DE000A1YCN14) ("2018-2 Notes" and together with the 2018-1 Notes the "SWAG Notes")

to provide the noteholders with further updated information regarding the insolvency proceedings of the Issuer relevant to them and known to the joint representatives. Reference is made in particular to the most recent joint statement issued as DGAP news on 29 November 2021.

2. Please note that the following information is based on the current knowledge of the joint representatives, primarily particular on the reports of SWAG's insolvency administrator and copies of the agreements referred to below. The joint representatives have only limited access to information in connection with the insolvency proceedings over the Issuer's assets or in connection with the insolvency proceedings of certain subsidiaries of the Issuer. In particular, the joint representatives do not have access to a lot of information regarding the insolvency proceedings of the Issuer or its subsidiaries, including information on the costs of the insolvency proceedings, tax issues, other terms and the timing of distributions. The information and figures contained herein may be out of date and/or incomplete. The joint representatives do not accept any liability for the accuracy of the information contained in this statement. The insolvency administrator has not verified or confirmed the accuracy or completeness of the information in this notice.

Distribution to the security agent 2021/2022 and 2024

3. The secured creditors of SWAG settled a dispute over the distribution of the liquidation proceeds in late September 2021. As a result, an amount of approx. EUR 5.6 million held by the security agent and an amount of approx. EUR 4.5 million held by a German court and arising from the sale of SolarWorld Americas Inc. and its subsidiaries ("SWA") were distributed by the security agent to the secured creditors.
    
4. From such settlement with the secured lender Debt Invest GmbH ("DIG"), the joint representatives received a pro rata amount of the liquidation proceeds of approx. EUR 4.36 million, which is composed as follows:

• c. EUR 1.13 million for distribution to the holders of the 2018-1 Notes; and
• c. EUR 3.23 million for distribution to the holders of the 2018-2 Notes.

These amounts were not distributed to the holders of the SWAG Notes until May 2024, as the liquidation of SWA had not yet made sufficient progress.

5. In late March 2024, the insolvency administrator distributed EUR 27.72 million to the security agent. More details are provided in the sections below.

General

6. According to information provided by the insolvency administrator in his most recent interim report, the insolvency proceedings are not expected to be closed before the end of 2026 and might potentially be closed on an even later date. As already reported in the DGAP announcement of the joint representatives dated 29 November 2021, a material portion of SWAG's assets is secured in favour of the secured creditors. Accordingly, it is expected that the proceeds for the secured creditors will result almost exclusively from the realisation of the secured assets. The realisation of the secured assets is governed by a realisation agreement between, among other parties, the insolvency administrator and the security agent.

Claims of the secured finance creditors

7. The secured finance creditors comprise the following claims after the opening of the insolvency proceedings (source: insolvency plan after 09/2021):

• The claims asserted by the joint representatives on behalf of the noteholders amount to EUR 47.35 million for the 2018-1 Notes and EUR 0.96 million on account of interest and EUR 135.2 million for the 2018-2 Notes and an additional EUR 2.76 million on account of interest at the time of filing for insolvency.
• Claims filed by the security agent on behalf of the lenders under the Senior Facilities Agreement ("SFA") and the SWAG Notes amount to approx. EUR 323.2 million. This includes the amounts filed by the joint representatives, i.e. these claims were filed twice but a distribution will only be made on one of the two claims. This also includes the SFA claim of approx. EUR 47.7 million transferred by DIG to the secured creditors and the SFA claim of approx. EUR 20 million the security interests of which were waived by DIG under the sale of assets to SolarWorld Industries GmbH („SWI“) in August 2017 (for details, see " Overview of assets to be monetised"  below). The claim filed by the SFA lenders less the approx. EUR 186.3 million SWAG Notes, approx. EUR 47.7 million DIG claim and approx. EUR 20 million waiver of security rights thus amounts to approx. EUR 69.3 million (as at the opening of proceedings in August 2017).
• The claims filed for the SWAG Notes are relevant for determining their share in the distributions to the unsecured creditors (once they are admitted under the insolvency plan). The share of the SWAG Notes in the realisation proceeds of the encumbered assets, on the other hand, also takes into account interest accrued from the opening of the insolvency proceedings.

8. The lenders under the Super Senior Facilities Agreement (SSFA) waived their claims under the EUR 50 million SFA in connection with the asset sale to SWI in August 2017.

Filings for inclusion in the insolvency schedule

9. The security agent has filed claims of the secured finance creditors in the amount of approx. EUR 323.2 million from parallel debt for inclusion in the schedule. At the same time, the secured finance creditors filed their claims for inclusion in the insolvency schedule. Neither the filing by the security agent nor the filing by the secured finance creditors have yet been recognised in the insolvency schedule, as the insolvency administrator had objected to their recognition.
    
10. In March 2024 the insolvency administrator, the security agent and the secured creditors agreed that the insolvency administrator would withdraw its objection to the security agent's filing. In return, the secured creditors withdrew their filings for inclusion in the insolvency schedule.

Overview of liquidation proceeds

11. The joint representatives understand from the insolvency administrators' reports that a significant portion of SWAG's assets were sold in the course of the insolvency proceedings (as described below) and that SWAG's insolvency administrator received substantial amounts as a result of these sales. Following outflows, SWAG's cash balance as of October 2022 was approx. EUR 50 million (as it had been in November 2021). This amount mainly stems from the realisation of secured assets. In line with the realisation agreement, the insolvency administrator receives contributions to the costs of the insolvency estate (Massekostenbeiträge) for ascertaining and realising the encumbered assets. In addition, the insolvency administrator is reimbursed for expenses incurred, but not yet paid, in connection with the realisation of security interests. This can significantly reduce the amount available for distribution to the secured creditors. The residual amount was retained, among other things, for substantial provisions, including tax provisions and provisions for potential repayments of advances by certain parties. It was possible to reverse part of these provisions since November 2021, including to the extent that tax audits were completed, so that the administrator effected a distribution of realisation proceeds to the security agent in the amount of EUR 27.72 million in late March 2024.
     
12. Said amount of EUR 27.72 million is composed as follows:

• EUR 20 million is taken from the approx. EUR 50 million of realisation proceeds referred to in the preceding paragraph.
• The remaining EUR 7.7 million is attributable to a distribution under the insolvency proceedings of SWI made to SWAG in 2023. With regard to SWI, reference is made to the DGAP announcement by the joint representatives dated 29 November 2021 (see "Asset sale to SWI").
• Of the EUR 20 million, a small portion is attributable to proceeds in connection with SWA, as the administrator continues to recognise provisions for costs and potential risks that cannot be ruled out with 100% certainty before the liquidation of SWAG's U.S. companies and the tax audit are completed, as well as for realisation costs.

13. The security agent and the insolvency administrator intend to consult in the course of 2024 on whether, when and to what extent further realisation proceeds can be distributed to the security agent, e.g. because the liquidation of the U.S. companies has been completed and further provisions have been reversed.

Distribution of EUR 27.7 million to secured creditors

14. The joint representatives will receive a pro rata amount of approx. EUR 19 million from the distribution of the EUR 27.7 million amount:
     
15. Of which, after deduction of costs, the two notes are expected to account for:

• approx. EUR 4.9 million for distribution to the holders of the 2018-1 Notes; and
• approx. EUR 14.1 million for distribution to the holders of the 2018-2 Notes.

16. These amounts are in addition to the EUR 4.36 million amount referred to above, so that approximately the following amounts will be distributed to the noteholders in total:

• approx. EUR 6.1 million for distribution to the holders of the 2018-1 Notes; and
• approx. EUR 17.3 million for distribution to the holders of the 2018-2 Notes.  
• In the creditors' voting without a meeting from 9 to 13 September 2021, the noteholders agreed on the fees and reimbursement of expenses for the two joint representatives under agenda item 2. Part of the fees and expenses were and will be reimbursed by the insolvency administrator. The two joint representatives will retain outstanding fee claims and expenses from the amounts received in accordance with the creditors' resolution.
• The joint representatives of the two notes are preparing to effect payment of the remaining amounts to the noteholders. Details on the procedure for this further interim distribution will be published in a separate statement.

Overview of assets to be monetised

17. From the insolvency administrator's report dated October 2023, the joint representatives understand that, inter alia, the following encumbered assets can possibly still be liquidated and – albeit only to the extent that security interests exist – could be paid out to the secured creditors on a priority basis:

• Vinci / Burkina Faso claims of approx. EUR 14 million against the JV partner Vinci in connection with the development of a solar park in Burkina Faso, which was delivered to the customer Simplified. Vinci is withholding payment on the grounds that SWAG is not able to fulfil its 25-year warranty obligations. The first proceeds of EUR 1 million (excluding recovery costs) will be paid to SWAG, the next EUR 4 million to SWIT and the remainder (if any) to the secured creditors. In this regard, settlement proposals have been exchanged for some time. A settlement that would involve payment by the administrator to the agent of EUR 1.5 million in the near term for the benefit of the secured creditors is now close to be finalised.
• Shares in Solarparc GmbH and the associated assets and companies were sold and the payment (~ EUR 7 million) must be claimed from SolarWorld Industries Sachsen GmbH.
• With regard to the sale of assets to SWI, there was a substantial distribution to SWAG in 2023 on the claims filed and recognised in the proceedings over the assets of SWI, which the administrator distributed to the security agent in an amount of EUR 7.7 million. For details on this matter, please refer to the DGAP announcement dated 29 November 2021 (see "Asset sale to SWI"). In the insolvency proceedings over the assets of SWI, claims of approx. EUR 8.8 million and a further EUR 2.6 million in favour of SWAG were recognised for creditors with a right to separate satisfaction (für den Ausfall). Payments were made on the recognised claims referred to above, of which EUR 7.7 million was paid to the security agent in late March 2024 as part of the EUR 27.7 million. The insolvency court has called for the subordinated claims to be filed in these insolvency proceedings, meaning that distributions on interest on the filed claims can be expected in the further course of the proceedings, which will then be distributed to the security agent by the insolvency administrator.
• Legal action against former members of the Executive Board was brought before the Bonn Regional Court in December 2020. In the meantime, several oral hearings have already been held.
• The liquidation of the U.S. companies (SWA) is about to be finalised. No further proceeds – beyond those already received by the insolvency administrator – are expected for the secured creditors.

If you have any questions, please contact One Square for G&P GmbH & Co. KG (solarworld@onesquareadvisors.com) for the bond WKN A1YCN1 and Mr Alexander Elsmann (info@rechtsanwalt-elsmann.de) for the bond WKN A1YDDX.

Contact
G&P GmbH & Co. KG
Theatinerstr. 36
80333 Munich
 

Rechtsanwalt Alexander Elsmann
Grafenberger Allee 120
40237 Dusseldorf