Shunfeng Photovoltaics is expected to need US$1.26 billion in working capital requirements for the next 12 months once its takeover of Wuxi Suntech is finalised, financial filings reveal.
Shunfeng reported that the expanded company, which would include include Wuxi Suntech needed the working capital primarily for the funding of 35 existing PV power projects (890MW) currently under EPC contracts.
The acquisition of Wuxi Suntech via the Wuxi bankruptcy court will enable Shunfeng to initially shed a significant tranche of Wuxi Suntech’s debt, which was documented to be around US$2.75 billion.
However, Shunfeng, whose takeover of Wuxi Suntech is still subject to shareholder approval, said in the financial filing that it would be liable for around US$562 million of Wuxi Suntech’s debts. Coupled to its working capital requirements, which the company said it expected these to funded by capital issues and debt financing, the company would be adding significant new debt.
The financial filing also noted that due to solar cell production at Wuxi Suntech having stopped since August, 2012 and a significant reduction in module PV module production, operating losses of Wuxi Suntech between March 20, 2013 to October 31, 2013 were only just over US$10 million.
However, Shunfeng noted that Wuxi Suntech reported a balance sheet profit in the first nine months of 2013 of approximately US$733.7 million, due primarily to the reversal of an unidentified “onerous contract” provision previously valued at approximately US$1.46 billion.
Suntech Group had net cash outflow for operations of US$33.3 milion and net cash inflow for investment activities of US$297.6 million, according to the document. Suntech Group also had a net cash outflow for financing activities of US$112.8 million.
Shunfeng noted that it was targeting 900MW of solar cell production at Wuxi Suntech in 2014 and 2.1GW of PV module production in 2014.
The company reported that Wuxi Suntech produced 763MW of PV module in 2013, while production between January and February 2014, reached 151MW.