FRANKFURT Shares in Centrotherm CTNG.DE plunged on Wednesday after the German solar equipment maker became the latest victim of the industry's ongoing shakeout by filing for protection from creditors.
The industry's crisis, triggered by overcapacity amid falling government subsidies, has hit peers Q-Cells QCEG.DE, Solar Millennium S2MG.DE, Solarhybrid SHLG.DE and Solon SOOG.DE, which have all filed for outright insolvency in recent months.
"With the help of these proceedings, the company aims to consistently pursue the reorganization path that it has already adopted," Centrotherm said.
Its shares were down 76 percent to 0.54 euro by 5.30 a.m. EDT.
Lavish power generation subsidies made Germany the world's largest market for solar power. Soaring costs led the government to slash so-called feed-in tariffs which the industry needs while solar power is more costly to produce than conventional forms of energy, such as coal and gas.
Filing for protection from creditors is part of an updated German insolvency law that came into effect March 1.
Under the new regulation, companies have three months to restructure their business if they are not yet insolvent.
During this period they are protected from creditors, similar to Chapter 11 proceedings in the United States.
Centrotherm also filed a second application with the court, for insolvency proceedings under its own administration. In this case, existing management will remain in place, instead of being replaced by an insolvency administrator.
The group said Tobias Hoefer, a reorganization specialist, had been appointed to the management board effective Wednesday.
Centrotherm said last month it could no longer use credit lines in light of financing discussions with banks, adding it would receive a hit to its liquidity in the low tens of millions of euros.
(Reporting by Christoph Steitz and Alexander Huebner; Editing by Dan Lalor)