Shunfeng misses deadline to settle 2016 corporate bond

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Chinese solar developer Shunfeng has told shareholders they will have to wait a while longer to learn details of when they will be able to vote on two proposed project sales as the company attempts to meet its obligations following another missed payment deadline last week.

The company on Friday announced the meeting details for votes on a sale of seven solar projects with a total generation capacity of 190 MW, and on a further two projects with an aggregate capacity of 93 MW, will be issued by the end of this month, rather than by last Friday and Sunday, respectively.

The larger of the two proposed deals, announced on August 24, concerns the sale of projects to state-owned China Power Investment Xinjiang Energy Chemical Engineering Group Akesu Co Ltd, for RMB538 million (US$84 million). The second planned transaction was announced on October 6 and relates to the sale of two more solar projects, to the Zhonghe Huineng Co Ltd subsidiary of state-controlled China National Nuclear Power Co Ltd, for RMB415 million (US$64.8 million).

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The latest of the two proposed deals is partially complicated by the fact the solar project companies in question, subsidiaries of Shunfeng, owed Kangfu Leasing a combined RMB571 million (US$89.2 million) at the end of 2020. Shunfeng had agreed to construct the projects, in October 2015, and then arranged to sell the farms to Kangfu before leasing them back. The project companies, however, have been unable to meet the rent since some point after December 2019, with Shunfeng blaming an inability to collect income owed to the project businesses, including state subsidies for clean energy which are three years in arrears. The cash owed Kangfu will have to be settled before any sale of the two solar farms completes.

Shunfeng needs to pay down a string of creditors and missed a deadline on Monday last week to settle a corporate bond worth RMB255 million (US$39.8 million). According to a stock market update to the Hong Kong exchange made by the company on October 6, Shunfeng has owed: True Bold Global Ltd HK$172 million (US$22.1 million) since November 27, 2019; Sino Alliance HK$351 million (US$45.1 million) since the end of 2019 and HK$800 million (US$103 million) since the end of last year; is on the hook for RMB330 million (US$51.5 million), since March 31 last year, for a 2015 corporate bond; and has owed Chongqing International Trust Inc RMB666 million (US$104 million) since September 30 last year.

The developer must also find HK$175 million (US$22.5 million) for Rainbow Fort Investments Ltd by the end of this month and HK$300 million (US$38.6 million) for China Minsheng Banking Corp Ltd by the end of the year.

Shunfeng said it would allocate RMB365 million (US$57 million) of the expected RMB415 million from the proposed two-project sale to Zhonghe Huineng to paying down debts, with RMB50 million (US$7.8 million) kept back for working capital.

The proposed sale would entail a loss of RMB69 million (US$10.8 million) on the book value of the two solar farms and would leave Shunfeng with 480 MW of remaining solar generation capacity.

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