Han­ergy’s debt web snags large lenders

China Daily (Canada) - - FRONT PAGE - By BLOOMBERG

Oneof the­manymys­ter­ies be­hind the share price col­lapse of the so­lar panel maker con­trolled by Li He­jun is this: Which of the Chi­nese bil­lion­aire’s many cred­i­tors risk los­ing ev­ery yuan they put into his com­pany?

A plethora of lenders are ex­posed to Han­ergy Thin Film Power Group Ltd and its par­ent com­pany, in­clud­ing Industrial and Com­mer­cial Bank of China Ltd, which is owed tens of mil­lions of dol­lars.

On May 20, about 47 per­cent of Han­ergy’s mar­ket value van­ished in min­utes and it is now un­der in­ves­ti­ga­tion by the Hong Kong Se­cu­ri­ties & Fu­tures Com­mis­sion.

Cred­i­tors are ner­vous. A group of 11 lenders have asked for a meet­ing to voice their con­cerns and dis­cuss their $82 mil­lion loan, said peo­ple familiar with the mat­ter.

“The in­ter­est­ing thing with Han­ergy is that so much is hap­pen­ing with the par­ent com­pany that in­vestors know noth­ing about,” said Charles Yonts, an an­a­lyst with CLSA Asia-Pa­cific Mar­kets in­HongKong. “The opac­ity about par­ent fi­nances and billings is ex­tra­or­di­nary.”

Li has tapped a va­ri­ety of fi­nanc­ing sources since the Hong Kong unit’s stock started surg­ing last year. They in­clude pol­icy-bank lend­ing, short-term loans from on­line lenders with in­ter­est rates of more than 10 per­cent and part­ner­ships with lo­cal gov­ern­ments.

Lenders also in­clude China Ever­bright Bank Co Ltd, China Min­sheng Bank­ing Corp, two of the com­pa­nies set up to man­age banks’ bad as­sets, and Har­vest Fund Man­age­ment Co, one of the coun­try’s big­gest fund man­agers with as­sets of more than $55 bil­lion.

A Han­ergy spokesman de­clined to an­swer ques­tions about the com­pany’s debts. But Li said Han­ergy has never been bet­ter. “Han­ergy is in its best shape since it started,” Li said in an in­ter­view pub­lished last Thurs­day.

Among the 11 banks be­hind the $82 mil­lion loan is ICBC Asia, theHong Kong unit of ICBC. That’s only part of the bank’s in­volve­ment: ICBC has lentHan­ergy units at least 400 mil­lion yuan ($64.5 mil­lion), ac­cord­ing to peo­ple familiar with the mat­ter who asked not to be iden­ti­fied be­cause ICBC has not pub­licly dis­closed the in­for­ma­tion.

Ex­port-Im­port Bank of China of­fered a standby let­ter of credit for the 11-bank loan. Separately, China Devel­op­ment Bank ex­tended a 30 bil­lion yuan line of credit to Han­ergy in 2011, ac­cord­ing to Xin­hua.

Lo­cal gov­ern­ments also pro­vided money.

Han­ergy en­tered sep­a­rate fi­nanc­ing deals with gov­ern­ments in Sichuan, Shan­dong and He­bei prov­inces. In at least three cases, Han­ergy or its units pledged the en­tire reg­is­tered cap­i­tal of projects to China Huarong As­set Man­age­ment Co and China Ori­ent As­set Man­age­ment Co, two of the firms China cre­ated 16 years ago to han­dle bad loans from the na­tion’s largest lenders.

A Huarong press re­lease fea­tures pic­tures of Li and Huarong’s chair­man, Lai Xiaomin. Last week, Huarong de­nied a re­port that it lent Han­ergy $200 mil­lion backed by shares.

Han­ergy also pledged own­er­ship stakes in a hy­dropower sta­tion in south­ern China to four trust com­pa­nies, a guar­an­tee com­pany and a sub­sidiary of Har­vest Fund Man­age­ment in ex­change for credit.

It also guar­an­teed more than 100 mil­lion yuan in loans from on­line mi­cro­fi­nancer Itouzi, and took 18.5 mil­lion yuan in loans from an­other mi­cro­fi­nancer, Jimubox, ac­cord­ing to the two lenders’ web­sites.

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