Solar giant Yingli‘s woes are set to continue with the news a U.S. law firm has lodged a class-action lawsuit in California on behalf of investors who bought shares in the Chinese manufacturer, from March last year up to last Wednesday.
Law firm Pomerantz LLP has given prospective claimants until next Monday (July 27) to join the action, according to a report run today on the globenewswire.com wire service.
The action has been triggered by the statement in Yingli's annual report, submitted to the Securities and Exchange Commission (SEC) on Wednesday, that indicated "substantial doubt" about the world's biggest solar company's ability to remain solvent because of "substantial indebtedness and net loss" which could affect Yingli's "ability to meet our payment obligations."
The law suit, registered in the U.S. District Court's Central district of California, alleges Yingli Green Energy Holding Company made false and/or misleading statements during the period from March 18, 2014, to last Wednesday, including the fact the Baoding-based giant could allegedly no longer borrow from commercial banks to fund operations.
‘Inappropriately recognizing revenue'
The Pomerantz suit also alleges Yingli, during the period in question, was inappropriately recognizing revenue, had no reasonable prospects of collecting on certain accounts receivable, based on historic customer conduct and that the company's inability to raise fresh capital or borrow funds affected its ability to continue as a going concern.
In support of the claim, Pomerantz points out Yingli's share price slumped $0.35 per share, or 15 per cent, to close at $1.99 per share after it revealed a net loss of $88.7 million on revenue of $555.5 million in a financial results update on March 25. Pomerantz adds Wednesday's annual report bombshell saw the share price fall a further 12 per cent to close at $1.49 per share on Saturday. Yingli shares are currently trading at $0.97 per share on the New York exchange.
The Chinese manufacturer has consistently denied recent rumors it has been forced to reduce or halt production because of indebtedness.
The share price slump comes at a time when Chinese stocks across the board have suffered steepling falls, burning small-scale domestic investors and prompting the Communist government to take emergency measures to try and shore up prices and stem the investor rout.
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