Solar developer Shunfeng mentions curtailment issues in China

The solar farm owner is having to juggle creditors as it tries to drum up further interest in its assets despite a ‘lack of marketability.’

August 31, 2021

Chinese solar farm developer Shunfeng‘s urgent bid to pay down its debt pile was not helped during the first half of the year by the fact 54 GWh generated by its projects was curtailed.

That was one of the details that emerged yesterday from Shunfeng’s first-half update, which again spelled out the creditors the developer is trying to keep patient as it dealt with a current assets-to-liabilities deficit of RMB2.67 billion (US$413 million) at the end of June. The group equity attributable to the owners of the company at that point was in deficit to the tune of RMB1.59 billion (US$246 million), Shunfeng confirmed.

The bind the solar developer finds itself in was spelled out by the fact the only profitable part of its operations in the January-to-June period was the Lattice Power LED manufacturing business Shunfeng has sold off for RMB670 million (US$104 million), which generated an RMB80.5 million (US$12.4 million) uplift in the period concerned.

Revenue from the sale of electricity generated by Shunfeng’s ever-diminishing solar portfolio came in at RMB364 million (US$56.3 million) in the first half, for a divisional loss of RMB119 million (US$18.4 million), which at least came in substantially from a RMB525 million (US$81.1 million) reverse 12 months earlier. The LED sales buffed a total first-half loss of RMB38.9 million for Shunfeng, down from a RMB469 million (US$72.5 million) hit a year earlier.

Lender China Minsheng Banking Corp, which at the end of last year agreed to accept HK$75 million (US$9.63 million) every quarter as Shunfeng bid to settle an overdue HK$780 million (US$100 million) was left unsatisfied in the first half but has held off again on the understanding it will be paid from the sale receipts of Lattice Power, which Shunfeng said it expects to bank next month.

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Holders of one overdue convertible bond, who were awaiting four HK$87.5 million (US$11.2 million) installments, starting on May 31, also received nothing and have agreed to accept settlement “with the proceeds received from the disposal of solar power plants held by the group.” To compound that uncertainty, Shunfeng said its hoped-for further future project sales “may include the discount arising from the lack of marketability.”

Another creditor, Chongqing International, will be paid out of the sale of equity stakes in various projects which were pledged to it as security for an overdue RMB666 million (US$103 million) loan, Shunfeng added, and a further RMB105 million (US$16.2 million) of commitments was overdue as of the end of June.

At the halfway point, Shunfeng said, it had cash and equivalents of RMB16 million (US$2.47 million) in its accounts.

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