Shunfeng Plans $774 Million Share Sale for Solar Farms

May 29, 2014 8:39 pm ET

(Corrects title of Eric Luo in fifth paragraph in story originally published May 28.)

May 28 (Bloomberg) -- Shunfeng Photovoltaic International Ltd., the new owner of what was once the world’s biggest solar manufacturer, is seeking to issue HK$6 billion ($774 million) of shares to build solar-power plants.

Shunfeng plans to sell as many as 600 million new shares at not less than HK$10 apiece, according to a statement to the Hong Kong stock exchange. The company is also planning to change its name to Sunfu International Ltd.

The new name and the share offering reflect the company’s expansion from a manufacturer to a power producer. It acquired Wuxi Suntech Power in April for 3 billion yuan ($480 million), the biggest panel maker in 2012, and this month agreed to buy an inverter company. A sister company owns a stake in the wafer supplier LDK Solar Co. Shunfeng Chairman Zhang Yi said in January that the company would install 3 gigawatts of solar systems this year.

“The expansion has successfully transformed the group from, previously, an upstream solar products manufacturer into a fully integrated solar company with downstream solar-power generation assets,” according to a filing yesterday. “The group has future plans to expand into the business of integration of solar energy storage and photovoltaics, and other forms of renewable or clean energy.”

‘Largest’ Supplier

The goal is to “become the world’s largest integrated clean-energy supplier,” Eric Luo, chief executive officer of Shunfeng subsidiary Wuxi Suntech, said in a video on his company’s website. Shunfeng is controlled by real estate tycoon Zheng Jianming, who took a 30 percent stake in 2012.

The proposed share offering represents 28 percent of the company’s existing share capital, and the HK$10 price is an 8.9 percent discount to the stock’s close yesterday. Shunfeng’s shares were down 4.9 percent at HK$10.44 as of 2:04 p.m. local time today.

Chairman Zhang said Shunfeng expects to install 10 gigawatts of solar power in the three years through 2016. That would require investing 25 billion yuan this year.

That strategy may be difficult to pull off, Stephen Simko, analyst for Morningstar Investment Services Inc. in Chicago said in an interview. “Their idea of throwing more money in their operations doesn’t seem particularly intelligent.”

LDK is “structurally uncompetitive compared with their best peers,” said Simko, who dropped coverage of the wafer producer because it “effectively bankrupted operations of the company.”

Shunfeng needs additional financing to expand, it said on May 7 after the China Business News reported that the company would seek to obtain 100 billion yuan in credit lines from China Development Bank Corp.

China had almost 20 gigawatts of installed solar capacity in 2013, according to Bloomberg New Energy Finance.

The National Development and Reform Commission earlier this month said China plans to speed up solar power development, targeting a more than tripling of installed capacity to 70 gigawatts by 2017 to cut reliance on coal.