Hanergy’s USD660 million Macrolink deal scrapped

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Serious question marks have been raised over a deal involving Chinese solar manufacturer Hanergy Thin Film Power, as the company releases a statement cancelling a share sale that was part of a $660 million equipment sale. It is the latest chapter in the Hanergy saga, which has seen the company’s shares plummet over the last 12 months, eventually resulting in the suspension of its shares trading.

Shangdong Macrolink New Resources Technology entered the agreement with Hanergy’s subsidiary, Fujian Apollo Precision, last February; however the financing terms of the deal raised questions over the true nature of the deal. Hanergy was due to supply Macrolink with 600 MW of building-integrated PV production equipment, as well as providing services to maintain the equipment, for $660 million and a curious stipulation that Macrolink would purchase 1.5 billion new shares in the company, which amounted to a total of 1.5 of Hanergy’s enlarged share capital – entitled the Subscription Agreement.

As part of the Subscription Agreement within the deal, Macrolink was required to pay 80% of the total amount under the Sales Contract before 30 April 2016. However, Hanergy released a statement on the Hong Kong Stock Exchange on Tuesday which said that Macrolink hadn’t fulfilled the 80% payment obligation, thus scrapping the share sale condition within the initial contract.

This appears to have all but killed the deal, however Hanergy seems to be clinging on to the possibility that the sale will still go through, as it wrote within the statement: “For the avoidance of doubt, the Sales Contract and the Service Contract shall remain in full force and effect.”

It is the latest in a long line of PV production equipment deals between Hanergy and outside companies to have fallen through since 20 May 2015 when the company’s stock fell 47%. This most recent one casts further doubt on whether Hanergy will be able to turn around its fortunes and once again become a major player in the solar market.