Panda Green shareholders to vote on latest $225m state bail-out plan

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The bean counters in Beijing may have applied the brakes to plans to bail-out solar manufacturer GCL-Poly’s solar project development business this week but a separate state-owned entity is forging ahead with a bid to rescue fellow developer Panda Green.

The Hong Kong-listed business’ balance sheet appears as rocky as that of GCL’s New Energy downstream business but Chinese state-owned Beijing Energy Investment Holding (Hong Kong) Co Ltd appears ready to take an even bigger stake in the business than the three other public entities on the Panda Green board.

The race is on for the project developer to pay down steepling debts, the most urgent of which is US$350 million of senior unsecured bonds set to fall due on January 25.

The plan is for the subsidiary of coal and real estate business Beijing Energy Holding Co Ltd to pay HK$1.79 billion (US$229 million) for 47.66% of the issued stock in the developer in order to sit on a 32% stake in the enlarged business.

Pressing debts

The HK$0.25 per share to be handed over is expected to generate a HK$1.76 billion windfall for Panda Green, after costs, which would still leave the developer around US$125 million short of satisfying those bondholders.

Crucially, the latest state-owned entity to pour money into Panda Green is promising to bring RMB8-10 billion (US$1.14-1.42 billion) in improved, cheaper-to-finance credit facilities for the next three years.

The deal is subject to shareholder approval with Panda Green informing the Hong Kong Stock Exchange last night, further details of the special general meeting required to hold the vote will be issued by December 10. The white knight investor is also demanding shareholders approve a waiver to the normal requirement that it would have to bid for the remaining 68% of the enlarged business.

If the bail-out is approved, Beijing Energy Investment Holding (Hong Kong) would become the largest shareholder in the reconstituted business ahead of fellow state-owned bodies China Merchants New Energy Group Ltd, which would see its stake reduced to 15.47%, and Huaqing Solar Power Ltd and distressed debt management investor China Huarong Overseas Investment Holdings Co Ltd, both of which would have a 13.59% interest.