http://www.wsj.com/articles/hanergy-cancels-deal-with-parent-company-to-buy-solar-panels-1437404090

Hanergy Cancels Deal with Parent Company to Buy Solar Panels

Panel manufacturer said earlier this year it would buy solar panels from its privately-held parent

WAYNE MA

Updated July 20, 2015 9:04 p.m. ET

HONG KONG—A Chinese solar-equipment maker at odds with Hong Kong’s securities regulators said Monday it canceled a deal with its parent company to buy up to HK$50.51 billion ($6.52 billion) worth of solar panels.The move comes five days after Hong Kong’s Securities and Futures Commission ordered Hanergy Thin Film Power Group Ltd. to keep trading of its shares suspended pending an unspecified investigation. An SFC spokesman said earlier today that the commission doesn’t comment on specific cases.

Hanergy Thin Film said earlier this year it would buy solar panels based on technologies known as “thin film” from its privately held Beijing-based parent over three years. The value of the deal would be capped at HK$16.84 billion a year from 2015 to 2017.

Hanergy said Monday in a statement to the Hong Kong stock exchange that it canceled the deal to “further minimize the amount of connected transactions” between itself and its parent, Hanergy Holding Group Ltd., which buys solar-panel-making equipment from Hanergy Thin Film, makes the panels and sells some of them back to the Hong Kong-based unit.

In June, Hanergy Thin Film canceled a $585-million deal to sell equipment and technical services to its parent. Other connected transactions, ranging from spare-parts sales, property leases and airplane charters, still remain between the two companies.

Hanergy Thin Film suspended the trading of its shares at its own request on May 20 after its stock price plunged 47% in a matter of minutes. Soon after, the SFC said it was the target of an unspecified probe.

The SFC on Wednesday took the rare step of ordering Hanergy to keep its shares suspended under stock-market listing rules that allow the regulator to halt trading if it appears that materially false, incomplete or misleading information was provided by the company. Hanergy said Thursday in a filing that it proposed terminating some or all its connected transactions with its parent to satisfy the SFC’s probe. However, Hanergy said the SFC considered that proposal inadequate.

Hanergy said it refused to hand over annual financial reports of its parent company and information about private loans taken out by its founder and chairman, Li Hejun. The Hong Kong unit said it couldn’t force its parent or founder to hand over the documents and added that its share suspension was “unfair and unreasonable.”

Hanergy Thin Film had puzzled analysts by being been one of the best performers on the Hong Kong stock exchange this year, with the company’s market capitalization growing bigger than that of Sony Corp. and at one point making Mr. Li the richest man in China. However, the global market share of Hanergy Thin Film’s solar panels is almost zero, analysts say.