Shunfeng halts trading ahead of 540 MW project capacity sale

Chinese solar company Shunfeng International Clean Energy announced a halt in trading in its shares this morning, pending an announcement related to a fire sale of around 540 MW of its solar project capacity.

The company has had a busy time of it since our last update in May last year when the extent of its debt mountain was revealed in its full-year figures for 2018.

Since then, a proposed sale of its Jiangsu Shunfeng Photovoltaic Technology Co Ltd to a business owned by Shunfeng major shareholder Cheng Kin Ming has helped ease some concerns and the company now aims to sell off 11 of its Chinese solar project companies to earn benefits worth another RMB1.63 billion (US$232 million).

Wuxi Suntech and meteocontrol

The sale of Jiangsu Shunfeng to the Asia Pacific Resources Development Investment Ltd business owned by Chen Kin Ming in December raised an immediate RMB200 million to pay off RMB24.7 million debts owed by Shunfeng to Shanghai Dazong Financial Leasing Co Ltd, COSCO Shipping Leasing Co Ltd and Cinda Financial Leasing Co Ltd and also paid other debt interest of RMB110 million as well as settling payables worth around RMB65.7 million.

The Jiangsu Shunfeng sale – which included the transfer of German solar project monitoring company meteocontrol GmbH and PV plant management unit Solarstrom AG plus the Wuxi Suntech brand to Asia Pacific Resources – also saw the buyer take on responsibility of HK$1.2 billion (US$154 million) of the HK$2.5 billion owed by Shunfeng to Sino Alliance and saw the Peace Link business also owned by Cheng Kin Ming surrender rights to HK$1.95 billion owed it by Shunfeng under a convertible bond issuance. The deal also saw Asia Pacific hand over RMB1.75 billion Shunfeng owed to the subsidiary it was selling so that the money could then be passed on to Jiangsu Shunfeng.

By the time Hong Kong-listed Shunfeng announced plans to raffle off more than a third of its 1,496 MW of solar project capacity in China to a largely Chinese state-owned buyer in November, the business had signed over its 59% stake in its Lattice Power Group LED electronic components business to the Hong Kong branch of lender China Minsheng Banking Corp Ltd. Under the terms of that HK$980 million debt reorganization, the bank in August agreed to accept the Lattice holding, a HK$60 million down payment and then the highest of either HK$270 million or 20% of the funds raised by a projected sale of 300 MW of project capacity last year plus HK$300 million by July 15 this year and the balance of the HK$980 million by December 18.

Bank loans

At the same time, Sino Alliance agreed the HK$1.3 billion it was owed separate from the Jiangsu Shunfeng transaction could be settled with HK$500 million or half the proceeds of the mooted 300 MW project sale last year plus the balance by the end of this year.

pv magazine has not been able to establish whether any 300 MW project sale took place last year or whether Shunfeng instead found another way to satisfy the two lenders.

On November 26, the 69.5% state-owned China National Nuclear Corporation agreed to pay RMB641 million for 11 Chinese Shunfeng project companies plus RMB788 million in payables owed by the projects to Shunfeng and RMB197 million in project dividends for the seller. Those sales, approved by independent Shunfeng shareholders, are due to raise RMB1.4 billion for debt repayments and RMB226 million for operational expenses.

Provided today’s halt in trading does not relate to a hiccup in the project sale, that would leave Shunfeng only RMB430 million and HK$1.57 billion short of settling the short term debts it said in November that it owed by the end of last year.