Conergy secures financing for turnaround and further growth

- Reconstruction measures yield first results
- Financing package agreed a month ahead of schedule

Hamburg - Conergy AG has secured follow-up financing with the support of a banking consortium. Commerzbank AG and Dresdner Kleinwort have provided the TecDax-listed solar energy company with additional liquidity of a total of € 240 million. In addition financial Covenants have been waived for the fiscal year 2008. Conergy AG intends to use the additional funding mainly for necessary investments, the early purchase of materials including for the solar factory in Frankfurt (Oder) and to pre-finance projects pertaining to the subsidiary EPURON in Hamburg. Earlier, in a provisional statement on the restructuring opinion, a prestigious, internationally active accountancy firm gave a positive evaluation of the Hamburg-based solar energy company’s restructuring as initiated by the Board of Management. The EUR 30 million credit line accorded in November 2007 and available until the end of February has not been used by Conergy; this is included in the EUR 240 million interim financing provided.


CEO Dieter Ammer: "Banks support turnaround and growth."

Conergy’s CEO and co-founder Dieter Ammer comments: "We thus have our financing signed and sealed a month ahead of schedule. We are on the right track and are delighted that our banks support our turnaround and our growth strategy. With these additional funds we have sufficient room for manoeuvre. At the same time, we see this as a confirmation of the new strategic focus on solar energy, which we have already initiated. Since December we have been systematically implementing our planned measures through which we are steering Conergy back towards profitability."


Major current shareholders want to participate in the company’s recapitalisation

The repayment of the interim financing is to be achieved first and foremost by carrying out a capital increase of around EUR 250 million during 2008. Furthermore, a reduction of working capital and proceeds from the divestiture of Discontinued Operations should contribute to improving liquidity. The total volume of the capital increase is guaranteed by Dresdner Kleinwort subject to the usual banking provisos. Third parties have provided security for 50% of this by means of firm equity commitment letters or firm underwritings. Details of the capital increase have not yet been decided and will be determined shortly before the transaction.

During the recapitalisation current and major shareholders have already made a significant contribution and have promised more. This once again underlines the confidence of the major shareholders in the company’s future. Mr. Otto Happel alone will take a 25 per cent share in the planned capital increase, after actively supporting the company’s reconstruction during the past months and pledging his further commitment in the future. Several major investors have also expressed their interest in participating in the capital increase.

Reorganisation yields first results; cost structure improvements in line with plan

The strategic refocusing of Conergy AG on the profitable and fast-growing solar energy business is proceeding according to plan. This process includes focus on photovoltaics, in both manufacturing and systems integration, on businesses with strong margins as well as on streamlined, efficient processes and structures. On January 1st the Board of Management introduced a central corporate function and three independently operating divisions. Conergy is currently pressing ahead with the discontinuation of non-strategic activities (for instance, the manufacture of heat pumps, biogas activities, solar heating collectors); this should be completed by the middle of the year.

With the focus on photovoltaics, the securing of liquidity, the securing of materials supplies and with the appointment of the new management, the strategic and operational problems that led to the liquidity bottleneck have been resolved. First signs of progress are already visible; inventories have been reduced by a cash-effective EUR 36 million over the last 10 weeks. The task of reducing the working capital will be continued in 2008. The manpower reduction of 500 staff, which has already begun, is going also according to plan. In connection with cost-cutting measures, the Board of Management is also currently putting in place significantly streamlined structures in the central corporate functions

Meanwhile a series of operating successes have been achieved: in Australia Conergy’s subsidiary EPURON entered into a strategic partnership with Macquarie Capital for the planning of a 1000 MW wind energy project involving a probable investment of around AU $ 2 billion. In the USA, Conergy’s subsidiary SunTechnics installed the U.S. Army’s largest solar system at the Fort Carson Army Base, Colerado.

With the factory in Frankfurt (Oder), the company owns one of the most modern solar cell and module manufacturing facilities. A major German technical inspection company conducted an initial inspection of the new cell and module production and stated in their report that they were convinced by the "highly automated and modern manufacturing facility". The long-term supply of materials, which has been secured and which begins this year, will enable the factory to work at part-capacity in 2008 and at full capacity from July 2009 onwards. This is expected to make a significant contribution to income.


Conergy Group: Provisional Figures for sales and income 2007

In the fiscal year 2007, the Conergy Group recorded sales of EUR 845 million (2006: EUR 752 million) before taking into account changes in accounting methods and with the former structure. For the fiscal year 2007, however, the Board of Management changed the accounting method for ongoing large-scale projects. This led to a postponement of sales to later reporting periods. At the same time, adjustments for Discontinued Operations were also reflected in the new accounts. Including these adjustments, provisional sales for the fiscal year 2007 were around EUR 712 million (2006: EUR 682 million).

Below, the Board of Management publishes key figures from the provisional, as yet unaudited Group accounts for the Conergy AG as of December 31st 2007, compared with values for the 2006 fiscal year, which have been adjusted for the sales and results of Discontinued Operations (DOP) and for the effects of changes in accounting methods for large-scale projects.

Million EUR 2007 2006
Sales 712 682
Gross profit 94 107
EBITDA -174 24
EBIT -210 19
EBT -229 13
Taxes on income* 72 -4
Result before DOP -157 9
Result DOP -37 -1
EAT -194 8

* provisional figure

By far the major part of the one-time changes in asset valuations and in accounting methods for large-scale projects implemented in 2007 were non-cash items.

The Discontinued Operations (DOP) are reported as a separate line item, after taxes. Losses from these operations amount to EUR - 37 million (2006: EUR - 1 million).

By far the major part of the taxes shown reflects deferred taxation. The figure shown is a provisional figure. There may be significant changes to the figure, which will not be cash-effective, however.


Outlook

2008 will still be a year of turnaround. The Board of Management of Conergy AG expects significant growth in sales to more than EUR 1 billion for the continuing operations. The Board of Management also plans a significant improvement in gross profit and a substantial improvement in EBITDA. The Board of Management is targeting breakeven at EBITDA level before special items.

In connection with the refinancing now undertaken, the company will have to pay considerable one-off consultancy fees and financing costs in 2008 as well. Without taking into account this and other special and one-time items, but after depreciation and the cost of financing, the Board of Management thus again expects significantly negative earnings before tax (EBT) in the high double-digit millions.

For the ongoing business in 2009, the Board of Management plans further significant growth in sales and a positive operating result (EBIT) in the double digit million region. From the second half of 2009 the company is aiming for margins well in line with those in the industry with the solar factory in Frankfurt (Oder) working at full capacity.


About Conergy

Conergy AG is the European solar enterprise with the highest sales and, with over 70,000 solar systems installed, is also a global market leader in the field of solar system integration. Listed since 2005 on the Frankfurt Stock Exchange, the group pursues a global growth strategy: it produces, installs and plans solar systems for its customers in more than 20 countries. The Conergy Group is now represented by branch offices on four continents.

Hamburg, 06 February 2008


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