The price for a Conergy share climbed to 59 euro cents after the company Friday announced that it had signed a refinancing package slashing the company's debt by $250 million. Conergy shares had increased recently on speculation that a deal was imminent. The remaining $177 million debt credit facility has been extended by another four years at market terms, the company said.

"This agreement paves the way for a fresh start and secures Conergy's long-term financial viability," Conergy Chief Financial Officer Sebastian Biedenkopf said in a statement. "A new Conergy will emerge from this balance-sheet restructuring."

Under the refinancing concept, Conergy will increase its capital stock from just less than $520 million to about $65 million to then conduct a capital increase of up to $246 million, with subscription rights for Conergy shareholders. If the subscription rights are exercised, Conergy will use the proceeds to reduce the existing lines of credit by the corresponding amount.

Larger shareholders, including German finance institution Commerzbank, won't exercise all the subscription rights, the Frankfurter Allgemeine Zeitung reports, adding that hedge funds Capital Sothic and York are willing to step in and take over some of the credit obligations in return for shares.

Observers expect Conergy's future ownership structure to be dominated by hedge funds. The restructuring package will be submitted for approval at an extraordinary shareholder meeting early next year, Conergy said.

Once Germany's largest solar energy company, Conergy has been battling its over-bloated structure, inflated sales and dropping module prices. The company's shares last month dropped to an all-time low of 36 euro cents.

The company said it's confident it can turn around its business by focusing on cutting costs and streamlining its business. The latest refinancing package will help Conergy growing in 2011, manly in emerging markets abroad, Biedenkopf told German financial newspaper Handelsblatt.

"With this solution, we have reached a compromise that we believe adequately addresses the interests of all parties involved," Biedenkopf said in the statement. "I am particularly grateful to the banks for their willingness to initiate this debt reduction based on their confidence in the company's future viability and thus to make the fresh start possible. We can now fully focus on our core business again."

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