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Senvion files for insolvency as talks with lenders fail

The Germany-based wind OEM files petition with Hamburg court to start 'self-administration proceedings' while seeking new investors

Wind turbine maker Senvion has filed a petition with a local court in Hamburg to start so-called "preliminary self-administration proceedings" under German insolvency legislation after talks with lenders failed.

"The objective of the proceedings is to allow Senvion to proceed with the comprehensive transformation process that was started earlier this year by the CEO and management board," the Germany-based company said in a statement, adding later that the court approved the start of the proceedings.

"In parallel, lenders and major bond holders are currently continuing intensive discussions around a financing offer to secure the continuation of operations which may allow the company to successfully exit this process."

Various potential investors have expressed their interest, Senvion said.

The proceedings come after Recharge was told discussions with Senvion's lenders had reached a critical stage.

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Chief executive Yves Rannou displayed optimism that the company will exit the insolvency proceedings successfully. "Although we could not yet win some breathing space through a financial restructuring, Senvion has a fundamentally sound and strong business model," Rannou said.

"Together with all our teams, the management and I are implementing measures to return the company to economic stability."

The CEO added that customers and suppliers are "critical on this journey".

Senvion (which until 2014 was called Repower Systems) offers onshore and offshore wind turbines ranging from 2 to 6.33MW (and is developing a 12MW-plus offshore machine), has about 4,000 employees worldwide. So far, 8,200 turbines by the OEM have been installed globally.

The preliminary self-administration proceedings relate to Senvion GmbH as well as its subsidiary Senvion Deutschland. Later this week, related companies Senvion S.A., Senvion Topco GmbH and Senvion Holding GmbH are also expected to file for insolvency.

Under the preliminary self-administration, the management board will remain in post, continuing to hold all powers and duties, and ensuring that business operations continue.

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Day-to-day business operations and existing service and maintenance contracts will be continued.

Trustees Gerrit Hölzle and Thorsten Bieg have been appointed to the management boards of the filing entities to support the restructuring process. Both have significant experience in successfully delivering self-administered restructuring programmes, Senvion said.

The supervisory board and Senvion's main shareholder, US investor Centerbridge Partners – which has provided Senvion with funds totalling approximately €82m ($92m) over the past nine months – as well as the main financing parties, have given their support to the management board, the company said.

A decision by the court on the application is expected soon.

Senvion's general meeting originally scheduled for 23 May 2019, and the publication of the quarterly report for the first quarter of 2019 which was scheduled for 15 May will now be postponed to a later date.

JOURNEY TO INSOLVENCY

Senvion's step comes after the turbine manufacturer has posted annual net losses since 2015, while the publication of its results for 2018 were postponed amid a critical financial situation.

Senvion's profits were squeezed as the wind turbine sector became ever more competitive as the result of tenders in most markets that have pushed power prices down, and put equipment prices under pressure.

In an attempt to save the company, newly-appointed chief executive Yves Rannou, in a turnaround strategy reported first by Recharge late last month, said the OEM is set to withdraw from 30 markets and concentrate on a remaining 20 core countries, including key markets in Europe and Latin America, as well as Australia and India.

Senvion needs time to execute the plan, and for several weeks has been locked in talks with lenders to secure the finance it needs to give it some breathing space.

The company has stressed its progress in key emerging markets and a healthy order book as grounds for hope if it can implement its turnaround.

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