Delay in United's 210 MW acquisition

Chinese developer United PV this morning (Friday) announced a delay in outlining the details of its planned acquisition of Nanjing Silk Road New Energy and its 210 MW Chinese plant portfolio.

On May 11, Hong Kong-based United revealed its agreement to spend up to RMB1.9 billion ($306 million) on the acquisition, including RMB105 million ($16.9 million) to buy the company, formerly known as Zhongneng Guodian New Energy Co-operation and Development Jiangsu, and the rest to finance capital expenses and assume the developer’s liabilities.

Today’s update to the Hong Kong Stock Exchange reported the circular outlining the details of the deal, due to be released today, has been delayed until a date on or before August 28, without expanding on the reasons why.

With Chinese stocks across all sectors in choppy waters, United PV recently had a $1.3-1.4 million boost to its flagging value thanks to the state-owned China Merchants New Energy Group significantly expanding its shareholding.

Subject to due diligence

Under the terms of the acquisition – which United PV announced in May would be subject to due diligence, the issue of permits and approval by the Chinese authorities – the buyer would assume 100 per cent of Nanjing’s shares and a portfolio of five PV plants in Inner Mongolia and the province of Zhejiang, totaling 210 MW in capacity.

May’s update stated four of the five plants were connected to the grid at the end of last year and the fifth was expected to follow suit by this month.

In May, Nanjing was reported to have revenue of RMB6 million ($966,000) and net losses of RMB21 million ($3.38 million) with total assets of RMB1.387 billion ($223 million) and liabilities of RMB1.356 billion ($218 million).

The projected acquisition was set to require United PV paying RMB25 million ($4 million) to acquire a quarter of Nanjing’s stock by May 31 with a further RMB187 million ($30 million) to follow to acquire the remaining stock holding by the end of September as well as supplying capital costs and meeting liabilities. It was unclear from today’s update whether the initial payment has been made.