Hanergy cancels deals agreed with itself


Chinese thin-film manufacturer Hanergy, a company which has made internal dealings through its complex corporate structure something of an art form, seems to have fallen out of love with itself.

The Beijing-based solar company, shares in which are under suspension after an investigation by the Hong Kong Securities and Futures Commission (SFC) into May's dramatic share price collapse, today (Monday) announced the cancellation of a module supply agreement with itself.

Under the terms of a master supply agreement outlined to the Hong Kong Stock Exchange on February 18, and a supplemental revision of the agreement on March 6, ‘Hanergy Group', defined in the updates as Hanergy plus its subsidiaries, agreed to supply panels to ‘the Group', defined as Hanergy Thin Film Power Group and its subsidiaries, for the current and forthcoming financial year.

The terms of the supply deal entailed ‘the Group' – further identified as a global entity as opposed to the Chinese-based ‘Hanergy Holdings' – purchasing 1.5 GW of a-Si/Si-Ge-based thin film panels per year at a maximum price of RMB3.3/W ($0.53/W) as well as an annual delivery of 5.3 million square meters of BIPV panels, for no more than RMB1,300/square meter ($209.32/square meter); 70 MW of CIGS flexible panels, for a maximum RMB4.1/W ($0.66/W); 80 MW of CIGS panels for no more than RMB3.76/W ($0.61/W); and 110 MW of nc-Si thin film panels for a top price of RMB3.6/W ($0.58/W).

Cost ceiling was raised in supplementary agreement

March's supplementary amendment added non-customized CIGS flexible chips and flexible functional modules of 70 MW per year, using CIGS flexible chips absorption layers to the CIGS flexible panels definition of the earlier agreement, for a maximum cost of RMB15.34/W ($2.47/W) and also raised the annual cost ceiling for the total supply deal from RMB12.8 billion ($2.06 billion) to RMB13.6 billion ($2.06 billion) for 2015, 2016 and 2017.

Today's stock market announcement tore up that agreement with the board of ‘the Group' stating the action had been taken to permit a wider choice in the selection of parts suppliers and to enable more flexibility for its downstream business.

The two cancelled supply deals were themselves a continuation of an earlier version, agreed after similar ‘arm’s length' negotiations between Hanergy and itself, thrashed out on April 11 and May 18, 2012, with the terms of that deal expiring at the end of last year after Hanergy had bought RMB838 million ($153 million) worth of its own panels from itself in 2013 and spent RMB1.5 billion ($248 million) on in-house products last year.

To add further confusion, Hanergy spelled out that the Chinese-based ‘Hanergy Holdings', mentioned nowhere else in the terms of either internal transaction, owns 73.14 per cent of ‘the Company', which, you may recall, is defined as Hanergy Thin Film Power Group Limited.

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