Canadian Solar privatization plans on ice

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Module supplier and solar company Canadian Solar announced that its special committee of independent and disinterested directors had advised the company’s board to cease its review of the $18.47 “going-private” transaction.

In what appears to be a trend among Chinese solar manufacturers, Canadian Solar (NASDAQ:CSIQ) has seen a proposal by its CEO Shawn Qu to go private, which would result in its leaving the NASDAQ exchange, in December 2017.

According to today’s announcement the special committee came to the recommendation in light of the amount of time that has passed since Canadian Solar’s Chairman and CEO Shawn Qu has proposed such a transaction. Therein, the special committee recognized that the solar industry had undergone significant changes, in the meantime. But more importantly, the special committee says that it is doubtful about the Qu’s ability to secure the financing that is required to enable him to a make a fully financed offer.

“I believe that my proposal of US$18.47 in cash per Common Share will provide a very attractive opportunity to the Company’s shareholders. This price represents a premium of approximately 7.1% to the Company’s closing price on December 8, 2017, and a premium of approximately 10% to the average closing price during the last 90 trading days,” wrote Qu in his proposal letter, in December 2017.

He added that he intends to form an acquisition vehicle to complete his proposal, and will finance the transaction with a combination of debt and equity capital.

The special committee informed CEO Qu about its recommendation, leading him to withdraw his offer, with immediate effect. However, he also explained that he continues to be interested in acquiring the company. To this end, he would look further to secure adequate financing and propose and another acquisition transaction to the board.

The Board cautions, “that there can be no assurance that any definitive offer relating to any acquisition transaction will be made by Dr. Qu or any other person and, even if one is made, that any definitive agreement with respect to such transaction or any other transaction will be executed, or that such transaction or any other transaction will be approved or completed.”

Additionally, the special committee advised the board to review alternative strategies that are available to the company, other than the transaction proposal, or future transaction proposals.

The board received a preliminary, non-binding proposal letter on December 9 from Qu and his wife, Hanbing Zhang, in which they offer to buy the outstanding shares they do not own for $18.47 per common share. Currently, Qu and Zhang are the largest shareholders, with around 23.5%.

Reuter’s reports that Canadian Solar’s shares, which have risen nearly 42% this year, have been halted in premarket trading. It adds that, according to its calculations, the company has a market cap of $1.07 billion.