Panda Green update: shareholder China Merchants shaken down for $260m


With its latest state-owned potential saviour dragging its heels over a critical bail-out, indebted Chinese solar project developer Panda Green this afternoon turned to one of its other Beijing-owned shareholders to get it out of a fix.

The Hong Kong-listed developer must raise US$242 million to settle 8.25% senior notes due to mature in eight days’ time and yesterday saw a hoped-for HK$1.79 billion (US$230 million) bail-out by state-owned Beijing Energy Holdings Co Ltd held up until next month, likely because of the looming debt deadline.

Panda Green’s solution is to turn to major shareholder China Merchants Group Ltd for a US$258 million lifeline with an effective money-back guarantee.

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China Merchants, which would retain a 15.47% stake in Panda Green after the proposed Beijing Energy deal, has subscribed to US$260 million worth of two-year, 8% senior notes via two British Virgin Island-based investment holding companies in which it holds a 30% stake: China Merchants Union (BVI) Ltd and Wealthy Marvel Enterprises Ltd.

Indirect subsidiary CMB International will receive a 1%, US$2.6 million slice of the subscription deal as placing agent, leaving Panda Green a net windfall of US$258 million. Interestingly, the terms of the deal stipulate the PV developer must offer to buy back the new notes whether its Beijing Energy bail-out materializes or not.

If that cash injection occurs by July 23 – its latest completion date is February 18 – Panda Green will offer to buy back the notes at 100.5% of their value, plus interest. If Beijing Energy walks away, Panda Green will be on the hook for a potential 100%-plus-interest offer to China Merchants.

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