It has been far from a smooth ride for Hanergy Thin Film investors, and the revelation today the company broke Hong Kong’s Takeovers Code this month is characteristic of the operations of the controversial solar company. Nevertheless, plans to move Hanergy’s stock market listing to Beijing appear to be almost over the line.
Independent shareholders on Saturday voted through a plan to have their stake transferred into a special purpose vehicle (SPV), with their holdings later to be reacquired by a Hanergy entity with the aim of securing a listing on Beijing’s A-share exchange.
But the proposal was by no means unanimously popular. The terms of the share swap stipulated the initial shareholder vote on the plan, held at a ‘court meeting’ on Saturday morning, must have no more than 10% of votes cast against it to be effective. The 8.88% of shareholders who voted against the plan presumably made for some nervy moments for Hanergy Mobile board members.
However the vote was carried and is set to be effective from June 6, dependent on various, unspecified conditions being fulfilled before that date – or by September 30 to avoid the restructure failing entirely.
SPV is established
The CX Live news portal today reported a Hanergy Mobile subsidiary called China Common Rich Renewable Energy Investment, which was established in the British Virgin Islands in February, will be the SPV into which Hanergy Thin Film shareholders will transfer their stock. CX added, an unnamed Hanergy Mobile affiliate will then buy back the stock with an A-share listing the goal. Presumably shareholders will be offered the choice of transferring shares into the affiliate as well as realizing an unspecified cash value.
The ‘privatization’ arrangement was hatched by parent company Hanergy Mobile Energy Holding Group Co Ltd in October in a bid to transfer the group’s Hong Kong listed Hanergy Thin Film Power Group Ltd business into mainland China, where it will face less public scrutiny. The deal was initially announced as a ‘cash purchase or stock replacement’ scheme by Hanergy, which would allow investors sitting on non-traded stock for four years to realize value at no less than HK$5 (US$0.64) per share. It subsequently emerged there would be no cash purchase element as the arrangement would involve a share swap.
The SPV is required because of restrictions imposed by the A-share exchange on the percentage of overseas investor holdings in its businesses. The unspecified Hanergy affiliate seeking a Beijing listing will have enough Chinese shareholders for the numbers to work.
Takeover code breached
With the plan voted through, however, Hanergy Mobile and its Thin Film unit were today forced to apologize for publishing adverts and news articles about the proposed share swap without first submitting the material to the Hong Kong executive for approval.
Thin Film shareholders have been unable to cash in their stock since trading was suspended in May 2015 after news broke the business’ soaring share price had been fuelled by internal trading between Hanergy affiliates. Hanergy Mobile and its Hong Kong subsidiary had warned independent shareholders that voting down the share swap plan would be likely to see them left with dead stock as the date for the Hong Kong unit to be kicked off the exchange approached.
Now the plan appears to have been approved, the parent company announced it expected Hanergy Thin Film’s stock to be delisted from the Hong Kong exchange on June 11.