April 24, 2015, 12:04 A.M. ET
Hanergy: Where Did All That Money Go?!
By Shuli Ren
First Financial Daily, a well-respected financial newspaper in China, had a damninginvestigative report on Hanergy Solar‘s (566.Hong Kong) parent Hanergy Group today. According to First Financial, since 2009, Hanergy Group has raised billions from bank loans, trusts and peer-to-peer lending in the name of funding solar projects. But many projects are stalled.
Hanergy Group sounds like it was hanging with the right crowd. Last January, it said that it has raised at least 20 billion yuan from reputable financiers such as the Minsheng Bank and Minsheng-affiliated Asia Financial Cooperation Association, and back in 2011, it raised 30 billion yuan from China Development Bank. But First Financial was unable to obtain details on these mega financing deals. Rather, Hanergy Group has been funding from small, regional banks, as well as trusts.Last October, Hanergy borrowed 200 million yuan from Minsheng in the form of a trust product. That trust had 4 tranches; the shortest tranche was only 3 months and charged an annualized 7% interest rate.
Why did Hanergy take out these expensive loans if it could have access to China Development Bank? And where did all of its money go? Is it cash squeezed? The newspaper asked.
First Financial’s reporters also went to the 9 solar project construction sites Hanergy operates and found that many sites were falling way behind the company’s own targets.
Shares of Hanergy fell 10.7% today, reversing yesterday’s gain.
By market cap, Hanergy is the world’s largest solar company. It is the Guggenheim Solar ETF‘s (TAN) largest component, with 12% weight.