Renesola rebounds from loss with Q2 profit but loan looms large


The good news announced in Renesola’s second-quarter update was that the Shanghai-based solar developer returned to profit in the second three months of the year.

Renesola, which focuses most of its attention on small scale installations, posted a $5.1 million profit after the $5.4 million reverse seen three months earlier, even if that positive result was boosted by $3.1 million belatedly recognized from the sale of U.K. projects three years ago.

In fact there was a second piece of good news revealed by the developer in the wake of yesterday’s figures, with major shareholder Shah Capital Opportunity Fund LLP having “tentatively” agreed to pump another $11 million into the business by overpaying by 12% for 100 million shares at $0.11 a pop.

Whilst long-term debt was not mentioned anywhere in the letter to shareholders fleshing out the Q2 results, the destination of that cash is not difficult to fathom. Scroll down to the balance sheet and short term borrowings of $82.8 million are writ large, of which $28.8 million are for a loan from a Romanian lender due for settlement in March, as revealed in the previous quarterly report.

Asset-liability gap

Those near-term liabilities are part of a current asset-to-liability shortfall of $24 million, even if the longer-term amount tips the scales in the company’s favor. With Renesola reporting cash and equivalents of $8.7 million in the bank – up from $1.7 million three months earlier – that windfall from North Carolina-based investment fund Shah will get them on the way to keeping the Romanian wolf from the door.

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As the company explained to investors in the update: “Quarterly fluctuations in project development revenue primarily reflect a normal unevenness in our business.” That business is focused on operating as a pure play project developer when most of Renesola’s peers are banking on solar product manufacturing and the company is vesting a lot of faith in high-margin installations in the U.S. and Europe. Of particular importance is a project deal signed with X-Elio North America to develop 500 MW of large scale solar capacity in California, Oregon and Utah.


Renesola claims to have a 1.4 GW development pipeline. It describes 714 MW of that as “late stage” but adds only 33.5 MW of generation capacity from that figure is under construction.

With revenue showing a $500,000 quarterly rise, to $13.6 million, gross margin recovered to 77.3% from the 2.8% it tumbled to three months ago after the sale of 21.1 MW of project capacity developed in Minnesota.

That suggests a positive direction of travel but, as ever, those borrowings will be a concern with Renesola owing $70.7 million in long-term liabilities related to financial leasing payments and failed sale-and-leaseback agreements in China. And then, of course, there is that loan deadline looming in March.

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