Once China’s richest person, now troubled Hanergy chairman Li Hejun is selling HK$537 million worth of shares at 95pc discount

PUBLISHED : Monday, 28 December, 2015, 9:59pm
UPDATED : Tuesday, 29 December, 2015, 12:55pm

Beleaguered Hanergy Thin Film Power chairman Li Hejun has agreed to sell HK$537 million worth of the firm’s shares at a 94.5 per cent discount as the firm struggles amid a regulatory probe.

Li, who was briefly named China’s richest person, entered into an agreement on December 21 to sell 2.5 billion Hanergy shares at 0.18 yuan each, showed a disclosure filing to Hong Kong’s bourse on Monday.

The stake amounts to six per cent of Hanergy’s total issued shares.

The company’s shares are traded on the stock exchange in Hong Kong dollars. They last traded at HK$3.91 on May 21, when trading was abruptly halted on the firm’s request after they plunged 47 per cent in about an hour.

The suspension was pending inside information that was released two months later, when Hanergy said the Securities and Futures Commission had ordered that its trading be suspended indefinitely, until it can fulfil certain disclosure requirements from the stock market watchdog.

READ MORE: Hong Kong regulator SFC orders extension of Hanergy share suspension

The SFC in June demanded from Hanergy audited financial statements of its parent Hanergy Holding for the past four years and detailed terms of outstanding loans taken out by Li.

Hanergy said the SFC’s request was triggered by its concerns about the company’s viability given its heavy reliance on its parent for sales and profits, and Hanergy’s abilityto keep the market “properly informed.”

But Hanergy said it could not meet the SFC’s request for financial statements since the documents were “outside” its control.

The parent, majority-owned by Li, has borrowed billions of yuan in recent years from lenders through various trust investment products, which are regulated lighter than bank loans and carry much higher interest rates.

Li, who topped the Hurun rich list in February, will own 66.3 per cent of Hanergy when the share sale is completed, from 72.5 per cent earlier.

Thanks to multi-year agreements by its parent to buy US$8.5 billion worth of solar panels production lines from it, Hanergy booked handsome profit growth for several years. Its stock rocketed more than six-fold in the 12 months before trading was suspended, making its market valuation six times that of US-based First Solar, widely considered the global leader in the thin-film solar panel sector.

READ MORE: Troubled Hanergy Thin Film Power announces massive layoffs and losses

Hanergy briefly ranked as the most actively traded stock in southbound trading under the Shanghai-Hong Kong Stock Connect that allows cross-border trading between the two cities.

But in the first half of this year, it posted a net loss of HK$59.3 million, mainly due to the termination of the bulk of the connected transactions with its parent company. Revenue tumbled 34 per cent year on year to HK$2.1 billion. It was forced to announce a plan to cut 2,000 people, or 37 per cent of its workforce.

Watch: Hong Kong investors fear another Hanergy

Baota Petrochemical Group, one of Hanergy’s few unrelated business partners, has failed to go through with an earlier deal to buy equipment and services from it worth US$1.32 billion and to subscribe to up to HK$16 billion of its shares.

Inner Mongolia Manshi Investment has also pulled out of a deal to buy up to HK$5.9 billion of Hanergy shares.