Shunfeng set to offload another 190 MW of solar capacity to pay debts

Chinese solar project developer Shunfeng International has revealed details of its latest planned solar farm sell-off, which prompted its shares to be suspended from trading on the Hong Kong exchange for the last nine days.

The developer will hold a shareholder vote to approve the sale of seven of its solar project companies to state-owned buyer China Power Investment Xinjiang Energy Chemical Engineering Group Akesu Co Ltd, a subsidiary of the State Power Investment Corp.

The proposed disposal of 190 MW of solar generation capacity would leave Shunfeng with a 573 MW portfolio and book a loss on the value of the project businesses of RMB100 million (US$15.4 million) as the developer attempts to pay down a large debt pile.

Shunfeng said it would use RMB488 million (US$75.3 million) of the RMB538 million (US$83 million) windfall expected from the sale, if approved, to pay down debts which include around US$324 million of overdue payments.

Listing its short term debts in an update to the Hong Kong exchange yesterday, Shunfeng said it had owed True Bold Global Ltd HK$172 million (US$22 million) since November 2019. Sino Alliance has been awaiting HK$351 million since the end of 2019 and HK$800 million (US$103 million) since the end of last year, although Shunfeng said it has signed a deal which will see investor Asia Pacific Resources shoulder a HK$1.2 billion (US$154 million) loan made to it by Sino Alliance, as part of a previous project sell-off in 2018. It was not clear from the Shunfeng update whether that $1.2 billion covered the HK$1.15 billion listed as owed to Sino Alliance.

Shunfeng said it has owed bondholders RMB330 million (US$50.9 million) since March 31 last year, for an instrument issued in 2015, and has owed Chongqing International Trust RMB666 million since September 30 last year.

The developer will also have to find RMB255 million (US$39.4 million) by October 25, to settle with bondholders who purchased a 2016 investment; HK$175 million by November 30, to settle with Rainbow Fort Investment Ltd; and HK$300 million to settle up with China Minsheng Banking Corp by the end of the year.

Receivables

On the positive side of the ledger, the company added, it expects to bank RMB15.6 million (US$2.4 million) by September 30, from a sale of six solar project companies announced in March last year; and the end of next month is also due to see completion of a sale of the profitable Lattice Power LED business in which Shunfeng holds a 58.3% stake, generating a further RMB391 million (US$60.3 million). The developer said it also expects the final RMB81.7 million (US$12.6 million) it is owed from a 490 MW project sale it conducted in 2019, with that cash expected to be banked this year.

Explaining the need for further sales of its solar estate, Shunfeng said it had banked national clean energy subsidies owed to it only as far as March 2018 and had subsidies receivable of RMB1.77 billion (US$273 million) and “receivables on accrued revenue on tariff subsidies from the state grid” of RMB1.71 billion (US$264 million).