Hanwha SolarOne halts shares sale

Hanwha SolarOne's HQ

SolarOne's base in China

Hanwha SolarOne, the world’s eighth largest PV module supplier last year, has pulled the plug on its ongoing share offering amid significant headwinds for its stock price, raising just 30% of the $70m it had hoped to drum up.

Last November SolarOne announced it had tapped Credit Suisse to raise up to $70m selling its Nasdaq-listed American Depository Shares on an ongoing basis, with the money to be used upgrading its factories and fueling the expansion of its downstream business in China.

The day that SolarOne made that announcement – 15 November 2013 – shares in the company closed at $4.04. Since then, however, the company’s share price has fallen to $2.96, significantly denting its ability to raise money.

All told, Credit Suisse raised $21m for SolarOne by selling 6.7 million shares at an average price of $3.20, SolarOne said today.

Throughout the share offering, SolarOne “maintained a conservative trading posture … in light of the lower stock price, potential shareholder dilution and availability of other financing options”, says chief executive Jay Seo, who is also head of the company’s incipient downstream business.

While the recent slide in SolarOne’s share price is not unique, it has been especially severe compared to similarly positioned rivals.

After bottoming out at $0.83 in late 2012, SolarOne shares mirrored the broader solar industry by going on a tear, peaking last October at $5.55 apiece. Since then, they have lost 46% of their value.

Shares in several other vertically-integrated Chinese PV manufacturers have also fallen since last October, with Yingli Solar down 24% and Trina Solar down 16%.

Others, however, have either seen their share prices remain flat during that period (JA Solar) or even increase (JinkoSolar and Canadian Solar).

Over the past three months SolarOne revealed two blockbuster memoranda of understanding – with Jiangsu Zhongtian Technology in December and Shanghai HuiTianRan in January – regarding potential “long-term strategic partnerships” addressing China’s booming downstream PV sector, where the company has large ambitions.

Neither, however, has yet been finalised.

Unlike Trina, Jinko and Canadian Solar, SolarOne has not yet returned to profitability, and swallowed a net loss of $75.2m in the third quarter. The company has not yet published its full-year figures.

While the global PV market is expected to grow substantially in 2014, and average selling prices for modules are likely to rise on a global basis, there are several reasons for concern among companies like SolarOne.

Last month, Beijing sent Chinese solar stocks down by announcing that it wants to see just 10GW of PV installed across China this year – meaning the market may actually shrink compared to 2013.

There is also the prospect that the US will broaden the punitive duties already placed on Chinese modules using domestically made cells to those using cells made in Taiwan – potentially placing a large burden on companies like SolarOne to build module-assembly plants overseas.

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