Hanergy Stake Sale Implies $20 Billion in Value Wiped Out

  • Li Hejun to sell 2.5 billion shares to buyers it didn't name
  • Shares in solar equipment maker have been suspended since May

Hanergy Thin Film Power Group Ltd., the solar equipment maker that earlier this year briefly became the world’s most valuable clean energy company, is now worth almost $20 billion less than when trading was suspended in Hong Kong more than seven months ago.

Hanergy is currently worth about HK$9 billion ($1.16 billion), compared with a market value of HK$163 billion when the shares were halted on May 20 after falling almost 50 percent. At one point this year, Hanergy’s market value was bigger than those of Sony Corp. and Twitter Inc.

The solar company’s valuation is based on two regulatory filings that showed Hanergy’s chairman, Li Hejun, agreed to sell 2.5 billion shares to unidentified buyers at an average of 0.18 yuan, or 21.5 Hong Kong cents. That’s almost 95 percent below the last traded level in Hong Kong, though it’s unclear why the transactions were in yuan when the stock is listed in Hong Kong dollars.

“That’s the current fair value unless he’s acting under duress," said David Webb, a shareholder activist in Hong Kong and founder of Webb-site.com. “Don’t forget it was a bubble stock."

Hanergy’s shares tumbled by almost half on May 20, wiping out $19 billion of its market value and prompting a trading halt. The stock was suspended at HK$3.91 amid a Hong Kong regulatory probe.

Stake Sale

“Li’s sale of his 6 percent stake at a 95 percent discount to the last traded price would normally mean that the company has lost 95 percent of its value,” Alex Gardner, an analyst at Bloomberg Intelligence, said by e-mail. “As a consequence, other shareholders have lost 95 percent of their money on this valuation.”

Calls to the public relations department of Beijing-based parent Hanergy Holding Group went unanswered.

A resumption in trading of Hanergy Thin Film “seems infinitely far away," resulting in uncertainties over the assets, said Ronald Wan, chief executive of investment bank Partners Capital International Ltd. in Hong Kong. 

Buyers could be risk takers who want to take their chances, or friends of management willing to help, he said.

If it’s one buyer with a 5 percent stake, the company would need to disclose the identity, according to Hong Kong Securities and Futures Commission requirements.

Contract Canceled

Hanergy’s May collapse brought an end to a sixfold surge in the space of a year for the manufacturer.

The company has faced a series of challenges since the share plunge and the regulatory investigation. In November, Ikea Group said it wouldn’t renew a contract to fit homes with solar panels.

A unit of the listed company also faces a lawsuit over HK$1.73 million ($223,000) in unpaid office rent and management fees. Hanergy Thin Film Power Asia Pacific Ltd., which is responsible for the company’s business in the region, is the target of a writ filed Dec. 3 at the High Court of Hong Kong.

— With assistance by Feifei Shen, and Lisa Pham

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