Meyer Burger Technology AG (SWX:MBTN) intends to raise about CHF 165 million (USD 173.5m/EUR 154.9m) gross through a capital hike in order to support a shift in its business model to the production of solar cells and modules with its own patented technology.
Meyer Burger notes that while its machinery is presently used to manufacture a big proportion of the solar modules around the world, the company is not reaping the fruits of its technological leadership, largely leaving the realisation of the added value creation to its customers. In the future, the company will make Heterojunction (HJT) and SmartWire production equipment exclusively for its own use. “Consequently, the entire value chain will remain with Meyer Burger,” it said.
The proceeds of the proposed capital raise will be spent on the establishment of the company’s own facilities for in-house cell and module production. Meyer Burger intends to acquire existing production sites in Germany so that it can save significant time and economic resources. The goal is to commence production in the first half of 2021 and gradually expand in the following years.
"We can be in the market with our products within just one year. Our manufacturing in Europe is competitive and offers a significant profit potential,” said CEO Gunter Erfurt.
Meyer Burger will initially focus on the production of photovoltaic (PV) modules for the rooftop segment, starting with 400 MW of annual production capacity, which, it estimates, will be enough for the group to achieve an operating profit. Then, by early 2022, it will seek to increase annual capacity to 1.4 GW for cell and 0.8 GW for module production with the help of CHF 180 million of debt obtained in 2021/22.
Ultimately, it wants to hit a production capacity of at least 5 GW in the longer term. Afterwards, more factory additions will be possible in Europe and North America depending on market demand. At some point in the future, the company could also start increasing its market share in the utility-scale segment.
Meyer Burger hopes to be generating annual sales of CHF 400 million-450 million and an earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 25%-30% within three years. The company has already secured several letters of intent from potential customers in Europe and the US to buy more than 2 GW of cells and modules per year. However, it has failed to agree a mutually beneficial cooperation with the REC Group of Norway and is now abandoning that strategic option.
At an extraordinary general meeting scheduled for July 10, the company’s shareholders will have to pick one of two options to proceed with the proposed capital increase. Option one combines a tranche placed directly with investors for gross proceeds of between CHF 30 million and CHF 55 million, excluding subscription rights, and a rights issue with tradable subscription rights targeting CHF 110 million-135 million in gross proceeds. Option two involves a rights issue with tradable subscription rights granted with respect to the entire transaction for up to CHF 165 million in gross proceeds. Here, Sentis Capital has committed to assume up to CHF 50 million gross proceeds as Backstop.
The solar machinery maker stressed that the capital raise will only be executed if it brings at least CHF 150 million. Also, it noted that it prefers option one because it “offers greater price stability and is more likely to attract new institutional investors as shareholders.”
If the transaction is cleared by Meyer Burger’s stockholders, the offer period is to commence on July 14 and end on July 22. Trading of the subscription rights at the SIX Swiss Exchange is seen to run from July 14 to July 20, 2020.
Credit Suisse is the global coordinator for the contemplated rights issue and also serves as joint lead manager alongside Zuercher Kantonalbank (ZKB).
(CHF 1.0 = USD 1.052/EUR 0.939)
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Image by Meyer Burger (www.meyerburger.com).
