Wuxi Suntech still owned by Suntech Power Holdings subsidiary, says PricewaterhouseCoopers

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Updated. PricewaterhouseCoopers, Suntech Power Holdings' appointed liquidators in the Cayman Islands have claimed that Wuxi Suntech is owned by Power Solar System Co., a direct subsidiary of Suntech Power Holdings, casting doubt on the deal to sell the PV manufacturer's Chinese arm.

If correct, the PWC claims mean the sale of Wuxi Suntech to Jiangsu Shunfeng Photovoltaic Technology Co. must legally be approved by PSS before going ahead.

Wuxi Suntech earlier this week accepted Shunfeng’s RMB3 billion (US$492 million) bid, pending approval by a local Wuxi court of a proposed restructuring plan.

But a statement issued by the PWC liquidators regarding a Suntech Power Holdings SEC Form 6-K filing, signed by Suntech Power Holdings general counsel, Kim H. Liou, would seem to throw the deal into doubt.

The SEC statement says in full:

“On 7 November 2013, the Grand Court of the Cayman Islands appointed Mr David Walker and Mr Ian Stokoe of PricewaterhouseCoopers as joint provisional liquidators (the “JPLs”) of Suntech Power Holdings Co., Ltd (“Suntech Power”), a company incorporated in the Cayman Islands. The JPLs intend to work with the Suntech Power Board and its various stakeholders to attempt to restructure Suntech Power and its affiliated group companies (the “Group”).

“We refer to Suntech Power’s Form 6-K Filing dated 19 July 2013 which disclosed certain transfers and disposals of the shares of Suntech Power Japan Corporation (“Suntech Japan”) and Suntech Power Investment Pte., Ltd. (“Suntech Singapore”) to Wuxi Suntech Power Co., Ltd (“Wuxi Suntech”) purportedly made in connection with intragroup debt restructuring (the “Purported Share Disposals”).

“We hereby put all relevant parties on notice that the JPLs will investigate and pursue the Group’s rights to the fullest extent in respect of the Purported Share Disposals. Both Suntech Japan and Suntech Singapore were owned by Power Solar System Co., Ltd (“PSS”) and PSS is an immediate subsidiary of Suntech Power. PSS may be insolvent under the laws of the British Virgin Islands (“BVI”), the jurisdiction in which it is incorporated. As such, the Purported Share Disposals undertaken by PSS early this year may be voidable under BVI Law.

“The JPLs are also aware of the Hong Kong Stock Exchange announcement made by Shunfeng Photovoltaic International Ltd on 1 November 2013 in relation to its proposed purchase of the entire equity interest of Wuxi Suntech by its subsidiary Jiangsu Shunfeng Photovoltaic Technology Co., Ltd. PSS is the 100% shareholder of Wuxi Suntech and any transfer or disposal of Wuxi Suntech’s shares requires the prior written agreement and consent of PSS. Suntech Power has instructed the directors of PSS that they are NOT authorised (in any way, whether directly or indirectly) to transfer or otherwise dispose of (in any way) any assets of PSS without the prior written approval of the JPLs. This includes any transfer or disposal of the shares of Wuxi Suntech. As of today’s date, the JPLs have not given their approval to any transfer or disposal of the shares of Wuxi Suntech to Jiangsu Shunfeng Photovoltaic Technology Co., Ltd or any other company or entity.

“The JPLs reserve all the rights against any person or entity who may have participated in or facilitated (in any way) any transfers or disposals of the shares of Suntech Japan, Suntech Singapore and/or Wuxi Suntech referred to herein and any potential subsequent transfer of those shares, including the proposed purchase of the entire equity interest of Wuxi Suntech by Jiangsu Shunfeng Photovoltaic Technology Co., Ltd.”

The SEC Form 6-K filing in July, 2013 was made during the tenure of David King as CEO and interim CFO of Suntech Power Holdings. He was forced out in early September.

However, the HKSE statement by Shunfeng at the beginning November would have been expected to have been issued with the consent of the court in Wuxi that is handling the bankruptcy proceedings of Wuxi Suntech and the bidding process that led to Shunfeng technically acquiring Wuxi Suntech.

The move by PricewaterhouseCoopers puts into question the entire legality of the bankruptcy proceedings in China and raises issues over which group of executives the administrators in China were dealing with and which executives PricewaterhouseCoopers is acting in partnership with. 

PWC was hired by Suntech Power Holdings after it was granted liquidation to protect itself against the efforts of creditors to recoup some of the US$540 million bond on which the company defaulted earlier this year.

Update: Nov 14

According to a Suntech Power Holdings representative, contacted by PV Tech, the Wuxi court appointed administrators of Wuxi Suntech’s restructuring are expected to finalise the sale of the company to Jiangsu Shunfeng over the next few days or into next week.

It is understood that no foreign courts would have any jurisdiction over the Wuxi court bankruptcy and restructuring proceedings of Wuxi Suntech.

The current board of directors of Suntech Power Holdings, including Zhou Weiping, interim CEO and interim CFO, were said to be continuing to work closely with administrators acting on behalf of the Chinese bankruptcy court and PricewaterhouseCoopers administrators acting in the Cayman Islands proceedings. 

However, in a HKSE filing, Jiangsu Shunfeng acknowledged that it was aware of the developments raised in the PricewaterhouseCoopers filing and cautioned the following;

“The company cannot guarantee that no interested parties may take steps to object to the Restructuring Plan, including the making of an application to the Wuxi Intermediate People’s Court to object to the approval of the Restructuring Plan.”

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