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Stake sale leaves future uncertain for China's fallen wind star Sinovel

Long-time backer sells largest shareholding in former global front-runner to mystery buyer

The future of Sinovel – once China’s wind turbine champion and briefly a challenger to Vestas as global number-one OEM – looks as uncertain as ever, a year after it pledged to bounce back from the grueling legal battle with US supplier AMSC that left its ambitions in shreds.

After the conclusion of the AMSC saga in 2018, Sinovel’s management held a media briefing at which company president Ma Zhong said the firm was ready to fight for a comeback as “a second-time start-up”, but that still looks a tough prospect for China’s fallen wind power star.

Last month Sinovel’s largest and most stalwart backer, state-owned Dalian Heavy Industries Corp (DHIC), announced it had agreed to sell its entire 15.51% stake in the wind turbine OEM to a Beijing company that was apparently freshly-registered for the purpose with just enough capital to cover the cost of the deal.

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The 332m yuan ($46.3m) transaction for an initial 5.01% , with the rest to follow by the year’s end, marks the first retreat by DHIC from Sinovel since the latter was established in 2006, leaving the largest single stake in the turbine-maker in the hands of an unknown entity that has yet to make any announcement over its plans for the business.

Within a week of the disposal, Sinovel found itself involved in a legal battle with DHIC after a subsidiary of its former shareholder sued it, alleging failure to pay back loans and interest totaling almost 70m yuan. Sinovel – whose lawyers have rarely been idle over the last few years – has countersued, claiming its former sister company delivered flawed equipment.

To add to the renewed legal uncertainty, Sinovel’s commercial performance is a far cry from the situation in 2011, when it was seriously considered a candidate for the world’s number-one wind turbine group with 4.4GW of installations and an 11% share of the global market.

The company installed a grand total of 50MW in 2018, leaving it barely a flicker on the radar of a Chinese wind sector dominated by the likes of Goldwind and Envision.

With issues over product quality, Sinovel’s problems were mounting even before the fateful day in 2011 when Massachusetts-based AMSC started legal proceedings over trade secrets theft, focusing on an employee of the US technology company who ended up in prison over his dealings with the Chinese group.

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The AMSC action plunged Sinovel into a seven-year legal battle with its former supplier, which only ended in July 2018 when the Chinese company agreed to pay $57.5m to settle the outstanding cases.

Despite seeing its stock market value shredded by 98% and being classed as a company in ‘special measures’ by regulators, Sinovel was bullish over its redemption prospects, with Ma Zhong’s pledge of a comeback accompanied by the launch of a 6MW turbine platform and plans for an 8MW offshore. A year later that move into offshore has still to materialise.

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