CENTROSOLAR Group AG pulls out of solar cell manufacturing JV

MUNICH, GERMANY: There has been a halting of negotiations in Lisbon on the continuation of Itarion Solar Lda, the joint venture originally launched by CENTROSOLAR Group AG and Qimonda AG for the manufacture of photovoltaic cells. Itarion Solar Lda will consequently file for insolvency.

Following the insolvency of Qimonda AG on January 23, 2009 a consortium of Portuguese industrial companies, banks and investment funds had initially been put together to take on Qimonda's interest in the venture. However, CENTROSOLAR Group AG came to the conclusion that the direction taken by the negotiations now ruled out the success of the project.

Among other aspects, the latest solution discussed with the consortium entailed excessive risks and necessitated a much greater involvement by CENTROSOLAR in the operating side of business than in the concept originally agreed with Qimonda AG. The management resources required would therefore have represented a major distraction from the company's own core business.

CENTROSOLAR now needs to write off its investment in Itarion with a current book value of EUR 10,1 million. In addition, Itarion carries net financial debt of approximately EUR 16,5 million, for which both Qimonda AG and CENTROSOLAR are jointly and severally liable. An agreement has been reached with the lending banks to repay this amount in instalments up until mid-2011; this arrangement will enable the company to continue expanding its core business.

The strategic decision to pull out of cell manufacturing frees up capacity at CENTROSOLAR, allowing it now to concentrate fully on its strengths. These include primarily its business as a systems integrator for PV roof systems, as well as the manufacture and sale of solar key components such as anti-reflective glass and mounting systems.

There has been a very healthy development in revenue and earnings in these areas since the start of the third quarter. The order backlog has also increased substantially in recent weeks. Because the decision to pull out of the negotiations is not expected to have any negative impact on operations,

CENTROSOLAR stands by its forecast of annual revenue broadly in line with the previous year's figure, coupled with a positive operating result that will nevertheless be down on the prior-year figure.