The main assets of what was once China's largest solar-panel maker are poised to be scooped up by a much smaller peer.
The main assets of what was once
China
's
largest solar-panel maker are poised to be scooped up by a much smaller peer.
Shunfeng Photovoltaic International Ltd. (1165.HK), a midsize solar
manufacturer listed in
Hong Kong
, has
won local regulatory approval to buy the main Chinese subsidiary of Suntech
Power Holdings Co. (STP), spokespeople for both companies said Friday.
The subsidiary, known as Wuxi Suntech Power Co., holds important assets such as
intellectual property, more than two gigawatts of solar-panel manufacturing
capacity and a research-and-development unit, according to people familiar with
the matter. However, it is also saddled with 10.7 billion yuan ($1.76 billion)
in Chinese debt, the people said.
Suntech, based in the eastern Chinese city of
Wuxi
, has
posted heavy losses due to a plunge in solar-panel prices and trade sanctions
by the
U.S.
The
New York-listed company in March defaulted on $541 million in convertible notes
held by
U.S.
bondholders, which put Wuxi Suntech into bankruptcy proceedings in
China
.
Suntech said earlier this month that Shunfeng had been "provisionally
selected" as the best strategic investor for Wuxi Suntech, beating out a
local government-controlled company, Wuxi Guolian Development Group Co.
Shunfeng is a minnow when compared with Suntech--in 2012, it shipped 206
megawatts of solar-equipment compared with Suntech's 1.8 gigawatts, the
companies' annual reports show.
A spokeswoman at the
Wuxi
's
foreign affairs office said that due to the restructuring being "fairly
complicated," the Wuxi Economic and Information Committee and Wuxi Guolian
didn't want to comment.
Spokespeople for both companies said the next step is for Chinese creditors of
Wuxi Suntech to approve the deal at a meeting sometime next month. A Suntech
spokesman said a local court must then approve the deal for it to be finalized.
A Shunfeng spokeswoman said the acquisition doesn't include the New York-listed
holding company, leaving the fate of Suntech's overseas operations and
prospects of financial recovery for
U.S.
bondholders still unclear.
Shunfeng said earlier this month that it was bidding for Wuxi Suntech but
didn't give a figure. However, the company said the acquisition was "very
substantial" and deposited 500 million yuan ($82 million) with a
court-appointed administrator that is overseeing the unit's restructuring.
Shunfeng requested that trading in its shares in
Hong
Kong
be suspended on Thursday, pending an announcement. The suspension
remained in effect Friday. The shares are up 62% since the Wuxi Suntech bid was
announced.
Shunfeng's biggest shareholder is Cheng Kin Ming, who made his fortune in real
estate. The businessman, who is based in
Hong Kong
and
also known as Zheng Jianming, purchased 30% of Shunfeng's shares last year and
has since cobbled together a vertically integrated solar-power supply chain
from pieces of several large Chinese solar manufacturers. Mr. Cheng, for
example, this year acquired more than a fifth of LDK Solar Co., once the
world's largest manufacturer of solar wafers, a key component of solar panels.
Shunfeng said earlier this month that it would finance its acquisition of Wuxi
Suntech through debt financing, capital raising, joint ventures and
partnerships. It added that it would also use the proceeds from a plan
announced in September to issue new shares. On Tuesday, Shunfeng said it raised
1.12 billion
Hong Kong
dollars ($144.5 million)
through the issuance.
On the day Shunfeng announced its bid for Wuxi Suntech, Shunfeng also agreed to
a loan facility with a financial institution called HK Bank for up to HK$980
million, according to the statements. Shunfeng must repay the loan if Mr. Cheng
gives up control of the company, the statements said.
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