Wuxi Suntech has apparently sold its stake in Suntech Singapore for $1 to a company known as Fast Fame Global Limited, in a hugely beneficial deal for Shunfeng in its proposed acquisition of Wuxi Suntech.
The deal represents another setback for Suntech Power Holdings, whose creditors are attempting to claw back as much value as possible from Wuxi Suntech.
As of a few weeks ago, Suntech Singapore remained one of the biggest question marks with regard to Shunfeng’s acquisition of Wuxi Suntech, the insolvent former manufacturing arm of Suntech Power Holdings.
Last May, ownership of Suntech Singapore was transferred from Suntech Power Holdings to Wuxi Suntech by the administrator overseeing the insolvency of the latter company.
Both Suntech Power Holdings and Wuxi Suntech initially seemed to view Suntech Singapore as an important asset, and one worth fighting for – with Suntech Power Holdings disputing the circumstances under which the transfer was made.
However, after a Singapore court ruled last month that Suntech Singapore owes Suntech Power $264m, the unit has come to look like a poisoned chalice for Wuxi Suntech – and, by extension, Hong Kong-listed Shunfeng.
And so on 27 February Wuxi Suntech – with the approval of the administrator still overseeing the company – formally sold Suntech Singapore to an “independent third party” known as Fast Fame Global Limited for $1, Shunfeng has informed its shareholders.
Shunfeng must still win the approval of its shareholders for the Wuxi Suntech acquisition at an extraordinary general meeting scheduled for 7 April.
“As Singapore Suntech is no longer part of the Wuxi Suntech Group, it will therefore be excluded from [Shunfeng should the acquisition be finalised],” Shunfeng says.
The deal to sell Suntech Singapore was apparently struck on 12 February, the same day that Shunfeng issued a press release calling the $264m ruling in Singapore “regrettable” given that its acquisition of Wuxi Suntech “could lead to thousands of jobs saved” in China.
Suntech Power Holdings did not immediately react to the announcement.
Shunfeng has also revealed that it anticipates facing a 7.86bn yuan ($1.27bn) shortfall in working capital over the next 12 months, should its 3bn yuan acquisition of Wuxi Suntech go through.
In addition to plans to ramp up and expand production capacity at Wuxi Suntech, Shunfeng has hugely ambitious plans to build several gigawatts of PV capacity across China in 2014.
Shunfeng says it is “optimistic” it can bridge the financial shortfall via debt and/or equity financing, and is currently in negotiations with various banks.
However, it acknowledges there is “no guarantee” that it will be able to raise additional funding. A failure to do so would significantly complicate and handicap its business plans.