Troubled Hanergy Thin Film Power announces massive layoffs and losses

Embattled solar panel maker Hanergy Thin Film Power Group unveiled a sweeping restructuring plan late on Friday that will eliminate over a third of its workforce, while reporting its first half-year deficit in six years.

Hanergy, whose shares have been suspended from trading since May, proposed to realign its business units, which resulted in major personnel redundancies.

“It is expected that the headquarters, business units and regional companies will be downsized by approximately 2,000 positions,” the company said in a statement to Hong Kong stock exchange late on Friday.

The reduction represents 37 per cent of Hanergy’s entire workforce, which comprised 5,458 people as of June, its interim report shows.

Parent company Hanergy Holding employs around 15,000 people, its website shows.

Hanergy reported losses for the six months to June amounting to HK$59.3 million, due mainly to the termination of connected transactions with its parent firm Hanergy Holding. Revenues tumbled 34 per cent year on year to HK$2.1 billion.

The Hong Kong Securities and Futures Commission has been investigating Hanergy over its sudden share price plunge that rocked the stock market in May. Its valuation was wiped out by almost half in under an hour in a dramatic sell-off by investors.

To assuage public concerns, the company in July moved to terminate the bulk of connected deals with its parent, which hurt its bottom line. Total value of such contracts reduced 90 per cent to less than HK$100 million, the statement showed.

Hanergy is also battling a vote with feet by its business partners. “Due to the reasons including the cancellation of connected transactions and that the trading halt in its shares is still in progress, the group’s existing business partners, having their confidence damaged, may suspend or terminate their cooperation with the group and may have a negative effect to the profit and revenue of the group for the second half of this year,” the company said.

In particular, Baota Petrochemical Group, one of Hanergy’s few unrelated business partners, had not confirmed an earlier service purchase and share subscription agreement worth US$1.32 billion and HK$16 billion respectively.

Due to the long non-trading status, the stock was taken out of the FTSE China 50 index and the MSCI indices.