Indebted Chinese developer spells out obligations in unaudited figures

The news that embattled Chinese PV developer Shunfeng International Clean Energy will need more time to prepare a shareholder vote to authorize the sale of another 132MW of solar has come at a bad time for the heavily indebted business.

Having missed Thursday's deadline for publishing its 2021 results – because of Covid-19 measures restricting the work of its auditors – Shunfeng instead published unaudited numbers for last year which spelled out the extent of its overdue debts.

The company had overdue borrowings of CNY 853 million ($134 million) at the end of December, plus a further CNY 473 million which became payable after breaching loan covenants.

Cash for creditors

Among its creditors, the cash owed to investor Sino Alliance fell to HKD 661 million ($84.4 million). True Bold Capital has been promised CNY 183 million of collateral from the anticipated CNY 890 million windfall from the proposed sale of those four solar projects, with a total 132MW of generation capacity. Details of the vote needed to approve that transaction are now expected by the end of April.

China Minsheng Banking Corp. has been promised an installment of HKD 65.6 million by the end of June, but one group of bondholders are awaiting HKD 175 million after that same level of payment was missed last year, with a further HKD 87.5 million due by the end of May.

Shunfeng said it hopes to reach an agreement with investor CDB over the CNY 22.2 million it is owed, after the developer missed payments of CNY 2.85 million last year.

Investors in an overdue 2015 corporate bond are owed CNY 398 million and their case is being heard by the Shanghai Arbitration Commission. Holders of a separate 2016 bond are owed CNY 317 million and those two latter cases complicate the 132MW project sale, which Shunfeng released details of in December. The developer's 95% stake in one of the four sites has been frozen by the Zhejiang Provincial High People's Court over monies owed to state-owned engineering, procurement and construction services provider Hunan Province Industrial Equipment Installation Co. Ltd.

The developer's 2021 figures showed little reason for cheer, with electricity sales revenue down from CNY 904 million in 2020 to CNY 650 million last year. The resulting loss of CNY 800 million for shareholders, up from CNY 552 million in 2020, was partly mitigated by a CNY 127 million profit from the LED business unit, which Shunfeng has sold off to pay creditors.

Zero inventory 

With zero inventory and its bank balance falling year on year, from CNY 227 million to CNY 55.7 million, the company said it had net current liabilities of CNY 979 million at the end of 2021, and a capital deficiency of CNY 880 million. The slew of project sales announced last year, however, halved current bank borrowings from CNY 3.22 billion in 2020 to CNY 1.6 billion, and slashed non-current obligations from CNY 2.22 billion to CNY 319 million.

The company was even penalized CNY 14.8 million last year for late payment of land taxes, so the sale of 132MW of its remaining solar portfolio of 489MW, it seems, cannot come soon enough.