The deal, set to conclude in Q2 2014, will see CEEG pay $13m in cash, with the balance settled by a forgiveness of debts between China Sunergy and Sunergy Shanghai. Under the transaction, CEEG has agreed that it will not utilize Sunergy Shanghai or its assets to compete business-wise with China Sunergy.
Sunergy Shanghai was established by China Sunergy for producing solar cells and conducting solar power research alongside other developmental activities but has under-performed since its inception in 2007. The reasons given by the company for this under-performing were market conditions and strategic planning by China Sunergy.
Stephen Cai, CEO of China Sunergy, said, "The sale of Sunergy Shanghai follows an extensive and thoughtful evaluation of potential options relating to sale of Sunergy Shanghai, and we fully expect the cash proceeds from the sale will further strengthen our working capital and enhance our operations. We believe these resulting improvements will contribute meaningful long-term rewards to the Company."
The news comes following a troubled period for the manufacturer. In December, its Q3 trading update showed falls in revenues and total shipments of 20% and 10.8%. Gross profit in the period fell from $6.7m to $1.7m. At the time, Cai placed the blame on the figures on restricted credit conditions within China between July and September and predicted that the company would bounce back in the near future.