Hanergy, whose shares have been suspended from trading since May, proposed to realign its business units, which resulted in major personnel redundancies.
“It is expected that the headquarters, business units and regional companies will be downsized by approximately 2,000 positions,” the company said in a statement to Hong Kong stock exchange late on Friday.
The reduction represents 37 per cent of Hanergy’s entire workforce, which comprised 5,458 people as of June, its interim report shows.
Parent company Hanergy Holding employs around 15,000 people, its website shows.
Hanergy reported losses for the six months to June amounting to HK$59.3 million, due mainly to the termination of connected transactions with its parent firm Hanergy Holding. Revenues tumbled 34 per cent year on year to HK$2.1 billion.
The Hong Kong Securities and Futures Commission has been investigating Hanergy over its sudden share price plunge that rocked the stock market in May. Its valuation was wiped out by almost half in under an hour in a dramatic sell-off by investors.
To assuage public concerns, the company in July moved to terminate the bulk of connected deals with its parent, which hurt its bottom line. Total value of such contracts reduced 90 per cent to less than HK$100 million, the statement showed.
Hanergy is also battling a vote with feet by its business partners. “Due to the reasons including the cancellation of connected transactions and that the trading halt in its shares is still in progress, the group’s existing business partners, having their confidence damaged, may suspend or terminate their cooperation with the group and may have a negative effect to the profit and revenue of the group for the second half of this year,” the company said.
In particular, Baota Petrochemical Group, one of Hanergy’s few unrelated business partners, had not confirmed an earlier service purchase and share subscription agreement worth US$1.32 billion and HK$16 billion respectively.
Due to the long non-trading status, the stock was taken out of the FTSE China 50 index and the MSCI indices.
Hanergy Thin Film to Cut Workforce by More Than a Third in Restructuring
Chinese company in a standoff with Hong Kong regulators wants to shift focus to solar products for consumers and industry
Aug. 28, 2015 1:26 p.m. ET
HONG KONG—A Chinese solar technology company in a stand off with Hong Kong regulators said late on Friday that it will cut head count by more than a third as part of a restructuring.
Hanergy Thin Film Power Group Ltd., which makes solar-panel-making equipment, told the Hong Kong stock exchange it would “downsize” 2,000 employees as part of plans to shift focus to developing consumer and industrial solar-energy products. Hanergy employed almost 5,500 people as of June.
The company, which sells manufacturing equipment mostly to its privately held Beijing-based parent Hanergy Holding Group Ltd., said it swung to a net loss of 59.3 million Hong Kong dollars ($7.7 million) in the six months ended in June, compared with a net profit HK$1.68 billion in the same period last year.
Hanergy Thin Film said revenue in the same period fell 34% to HK$2.12 billion because of the cancellation of supply agreements with its parent, which makes solar panels.
Trading in Hanergy Thin Film was suspended in May at the company’s request, after the stock lost half of its value in one day. Hong Kong’s Securities and Futures Commission has since extended the suspension indefinitely, as it probes the finances of the solar-equipment manufacturer and its dealings with its parent. Hanergy Thin Film has said the extended suspension is unfair and unreasonable.
Hanergy Thin Film said on Friday in regulatory filings that because of the canceled deals and the SFC investigation, its business partners have had their “confidence damaged” and may “suspend or terminate cooperation.” This could have a negative impact on earnings in the second half of this year, it said.
The SFC investigation into the company includes queries about owner Li Hejun, who briefly became China’s richest man after the company’s shares rose to more than HK$9 in March. The company has said it can’t compel Mr. Li or its parent to provide financial documents requested by the SFC. It added that it plans to appeal the SFC’s decision to suspend its shares.
Hanergy Thin Film said in the regulatory filings that it adopted a new code of conduct regarding securities trades of its directors. It said all directors complied with the code in the first half of the year.
The company’s thin-film technology has the potential for lightness and flexibility. But thin film, which is less efficient than more-common solar panels based on crystalline silicon, hasn’t caught on widely.