A Hong Kong-based Global High Growth Industries Fund Series SPC, acting on behalf of China Huacai Finance Equity Investment Fund SP, has entered into a deed of assignment relating to a deal made last year between United Photovoltaics Group Limited and Hareon Solar Technology Company Limited.
If successfully concluded, United PV’s HK$500 million (around US$90 million) lawsuit against Hareon will be dropped.
United PV has said it will assign and transfer all of the rights, obligations and responsibilities, including the claims under the Cooperation Agreement from Hareon to the SPC. The consideration for the assignment is HK$500 million, plus interest, which is expected to be settled over three payments of HK$150 million, $100 million and $250 million. It will only become effective once the full amount has been paid.
According to the terms, Hareon has to reimburse United PV all arbitration and legal costs to the tune of RMB 5.6 million (around US$851,172). Once this has been received, and the SPC has paid the second, HK$100 million, installment, United PV will withdraw the legal proceedings against Hareon, and the deal from last May will be terminated.
Under the 2015 deal, United PV agreed to purchase Hareons entire equity interest in 930 MW of solar projects, if they were operational and grid-connected by last December 10. As part of the deal, United PV paid Hareon HK$500 million. However, earlier this month, the former filed a HK$500 million ($89.8 million) claim against the latter after only some of the projects met delivery conditions.
Hareon, one of Chinas major multi- and mono-crystalline silicon manufacturers has had a checkered few years. Having gone public on the Shanghai Stock Exchange in 2011, from 2013, the company recorded two years of net loss. If it happens a third time, it will be delisted, thus detrimentally affecting its funding avenues.