Panda Green writes off another $5.6m

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Another day, another loss-making project disposal for Panda Green.

The heavily indebted developer this morning announced to the Hong Kong exchange it agreed on Friday to offload two wind power projects with a total generation capacity of 96 MW in the Shanxi province of China.

Apart from constituting a RMB40 million (US$5.6 million) loss on the transaction – if approved by shareholders of one of the Panda Green subsidiaries making the sale – the statement reflected ongoing wind power curtailment issues in China.

A statement about the reasons for the sale, in addition to remarking about the developer’s liquidity, also highlighted “the higher risk of curtailment due to the insufficient consumption capacity in Shanxi”.

Sale terms

The sale would see Xinhua Electric Development and Investment Co Ltd acquire the 78% holding in the two Shanxi Aite wind projects owned by Panda Green’s Hangzhou Canhong Investment Management Ltd Partnership and 22% of the 27% interest held by the developer’s Changzhou Zhaolian Lvjing New Energy Ltd subsidiary.

Changzhou Zhaolian shareholders will have to vote through the deal, which will generate RMB239 million for its embattled parent as well as taking any associated commitments off Panda Green’s lengthy list of liabilities.

The Panda Green subsidiary will retain a 5% slice of the projects, as part of the deal, with the income generated by it to be used to mitigate any commitments acquired by the buyer in relation to the deal. Xinhua Electric will have a RMB12.5 million option to acquire the outstanding shareholding in the projects, which have net assets rated at RMB252 million.