Phoenix Solar to file for insolvency next week after US customer demands payments

“Following the drawdown of project-related letters of credit in the amount of approximately $8 million by a large customer of Phoenix Solar Inc. … the parent company Phoenix Solar AG is obligated to reimburse the issuing banks immediately under its existing financing agreements,” Phoenix Solar said.

FRANKFURT: Phoenix Solar, once one of Germany’s largest solar groups during the sector’s heyday, on Friday said it would file for insolvency next week after an unnamed U.S. customer demanded payments that exceed the group’s funds.

“Following the drawdown of project-related letters of credit in the amount of approximately $8 million by a large customer of Phoenix Solar Inc. … the parent company Phoenix Solar AG is obligated to reimburse the issuing banks immediately under its existing financing agreements,” Phoenix Solar said.

“Attempts by the company’s management to find a solution with the said U.S. customer and the company’s banking consortium in Germany have failed,” it added.

Shares in the group, which used to be a member of Frankfurt’s technology index before an oversupply crisis led most of its local peers to file for insolvency, traded 1.7 percent lower at 1.46 euros apiece.

The news comes only months after larger peer SolarWorld filed for insolvency, overwhelmed by a renewed wave of cheap Chinese exports that was caused by reduced ambitions in China to expand solar power generation.

Source: Reuters