Terms worsen for GCL in proposed project sale to China Huaneng

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Chinese solar developer GCL New Energy has added 109 MW of project capacity to the portfolio it aims to sell to state-owned power company China Huaneng Group.

Previous updates about the planned project sale, published on the Hong Kong Stock Exchange in January and April, stated the two solar project company subsidiaries being sold by GCL owned seven China solar farms with a total 294 MW of generation capacity.

However, an update on the proposed deal – which will be subject to a vote by shareholders of GCL New Energy and near-63% controlling shareholder GCL-Poly – on Tuesday stated the two target companies controlled ten solar projects with 403 MW of generation capacity.

Conversely, the financial benefits of the proposed transaction appear to have worsened in the intervening period, with GCL New Energy set to bank a net RMB1.38 billion (US$203 million) from the sale – at a RMB205 million loss on the book value of the solar plants – whilst reducing its liabilities by RMB1.81 billion. It was previously stated the GCL project company would bank RMB1.08 billion from the sale and reduce its debts RMB2.66 billion.

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The latest update indicated GCL New Energy has RMB15.5 billion of liabilities due for settlement by June 30. Selling off the ten projects indicated would chip RMB380 million off that current debt pile.

GCL New Energy and GCL-Poly stated, in the joint market update, their shareholders would be given details of when and where votes on the proposed deal would take place, by October 30.

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