Rumors continued to circle about the scale of the Cayman Islands-registered company’s liabilities at the World Future Energy Summit in Abu Dhabi this week after analyst Richard Pearson, writing for the Seeking Alpha investors website, claimed Trina Solar is locked in to more than 50 historic polysilicon purchase agreements at unaffordable prices.
Pearson claimed the deals had been set at purchase levels far in excess of the returns the module manufacturer can realize in todays depressed market and amounted to an invisible $14bn obligation owed to poly suppliers including Hemlock Semiconductor, GCL Poly, Jiangsu Zhongneng, OCI and Wacker Chemie.
The analyst went on to state maturing debts of $800m in the "weeks and months" ahead would force the company into insolvency.
Tellingly, the writer disclosed at the foot of his lengthy online report that he is holding a short position against Trina Solar shares, which surged last week following news of veteran U.S. investor Warren Buffett’s decision to invest in Sunpower and details of an additional $2bn subsidy for the solar industry from the Chinese government.
A statement on Trina Solar’s Chinese website said Mr Pearson’s blog did "not conform to the facts" of the company’s "financial position, operational status and risk-resisting ability" which were described as at "a leading level".
The statement added: "We note that the article’s author admitted that he engaged in the trading of shares of Trina Solar," and warned: "we will retain the right to hold accountable the parties responsible through legal channels".
Thomas Young, investor relations VP for Trina Solar concurred and told the greentechmedia.com website Pearson’s figures were based on a supply deal signed with GCL Poly subsidiary Jiangsu Zhongneng which, he said, was a framework agreement negotiable depending on the market price of polysilicon.
The website quoted Young as saying prices were set "subject to periodic adjustments. We have negotiated actual polysilicon and wafer purchase amounts and prices on a monthly, quarterly or annual basis."
Thomas also dismissed the assertion Trina is facing $800m of maturing debt, adding: "Trina’s debt is not due in the next few weeks and months, but historically renewed over the financial year."
A statement attributed to Trina Solar and reported in the Chinese Economic Daily newspaper as well as on the state-sponsored Xinhua.net website added: "Trina Solar has made an announcement recently to declare that the company has no $14bn debt to repay. The number is merely a misinterpretation of its silicon and wafer supply deals, signed from 2008 to 2011.
"The $780m short-term loan affirmed by its financial statement in September will come due in a year."
Meanwhile, Trina’s chief financial officer Terry Wang today told Bloomberg module shipments would rise at least 30% this year with demand from China a major factor as well as markets around the world except in Europe.
Wang said rising demand in China could even halt the ongoing solar price decline in the second half of the year and pointed out Trina has already raised the amount of its production capacity in use from 50% in December to around 66% this month and that the figure would continue to rise as the company starts to develop its own projects.
Regarding the rumored debt pile, the proof will be in the pudding according to Pearson, who pointed out in his article that the companys new auditors KPMG can be expected to insist that the $14bn supply contract commitments be included on the balance sheet when the company’s next annual report is due in mid-March.
Watch this space.