A deal, which Hanergy supply 600MW of BIPV production equipment to Macrolink for US$ 660 million and an agreement that Macrolink would purchase 3.48% of the company’s share capital has appears to be cancelled.
The order was cancelled because Shangdong Macrolink failed to pay 80% of the manufacturing equipment order segment of the deal, which worth US$ 198 million, while technical service fees related to the equipment order would amount to around US$ 462 million.
The deadline for payment had originally been extended to April 30, 2016. However, the unprecedented structure of the deal, whereby Hanergy Thin Film would issue 1.5 billion shares at a value of HK$ 0.0025 each share when its stock price (before trading halted) was significantly higher at HK$ 3.91 per share, meant consummation was highly unlikely unless Hanergy Thin Film’s stock started trading again.
In reporting its 2015 annual results, Hanergy Thin Film that its recognised revenue included US$ 248.8 million in relation to the sale of a-Si thin-film production plant for BIPV applications to Shangdong. Hanergy Thin Film claimed to have provided 300MW of production line equipment to the customer in 2015 but had only received around US$ 20 million that was attributed as an initial down payment.
Hanergy Thin Film failed to mention that aspect in its latest financial filing cancelling the deal. Indeed, the company noted at the end of the document that both the original sales contract and service contract would remain in ‘full force and effect.’
The cancellation of the Shangdong Macrolink supply and service contract is the last of a number of similar sized and valued deals with other companies that had no previous PV manufacturing experience, while all had similar stock issue structures that would have been of higher value to the customer than the equipment and service contracts. The string of deals were key to Hanergy Thin Film’s rapidly rising share price that valued the company at more than US$39 billion before crashing and trading halted nearly a year ago.