China's solar king Shi 'shocked' at dismissal
Happier times for Shi Zhengrong. Photo: Bloomberg
Shi Zhengrong, who was ousted as chairman of China's giant Suntech Power this week, said he was “shocked” by the board's “misconceived and unlawful” decision to remove him and that he's been excluded from meetings for the past month.
“The problem is they don't have a solution,” the Australian-trained Shi said yesterday after issuing a statement. “They need a viable business plan. They need to talk to all the bondholders and suppliers and government."
"All the stakeholders want to talk to me. All the bank CEOs want to talk to me. They want to know why Dr. Shi didn't show up.”
Shi said the solar manufacturer's board has no plans for refinancing the $US541 million convertible bond due on March 15.
Shi founded Suntech in 2001 after earning a Ph.D. in electrical engineering from the University of New South Wales and serving as executive director of Pacific Solar Pty. in Sydney.
It was the first Chinese solar company in the 17-member BI Global Large Solar index to sell shares on the New York Stock Exchange. Its 2011 sales of $US3.1 billion made it the world's biggest panel maker. It's yet to release 2012 earnings.
Shi's comments indicate divisions within the Chinese company's management about how to recover from an accounting scandal and plunging solar-cell prices, which have led to two years of losses for Suntech. Suntech said today it's confident its appointment of Susan Wang is valid and legal.
“This is definitely negative for the company, making internal conflicts public and leaving fewer efforts to deal with company matters,” Wang Haisheng, a Shanghai-based analyst at China Minsheng Banking Corp., said.
Suntech hired UBS last year to review options about how to refinance the bonds due this month and have been in talks with bondholders about a solution. The company also is seeking financial support from the local government in Wuxi, the Chinese city near Shanghai where it's based.
“Our best guess is that Suntech is preparing for ceding control to a third party,” said Nitin Kumar, an analyst at Nomura Singapore who rates the shares the equivalent of sell. “Management change at Suntech was sorely needed given the execution missteps over the last five to six years.”
The shares fell 3.8 per cent to $US1.16 in New York. The company's shares have risen 35 percent in the last three months on increased confidence in the manufacturer and its peers. Suntech hasn't reported a profit since the first quarter of 2011. It's bond, due March 15, was unchanged, paying 37.5 cents on the dollar.
On March 4, Suntech named Susan Wang to replace Shi as chairwoman of the board. Shi remains as a director. Wang has been a director since 2009.
“The board of directors is confident that the appointment of Susan Wang as chairwoman to replace Dr. Zhengrong Shi is valid and effective under the law of the Cayman Islands, the country of the company's incorporation,” Suntech said in a statement today. “Shi remains a director on the board.”
In December, Suntech cut its forecasts for solar shipments. In July, it said it was investigating fraud involving a 554.2 million euro ($US680 million) financing guarantee it made involving German bonds that may have never existed.
Shi wishes to remain involved in the company.
“I have to do my best to save the company,” he said in the interview. The board's decision was “disastrous”, and he has been excluded from meetings for “about a month,” Shi said.
“I have good terms with all stakeholders, including the government, banks and suppliers,” he said, adding that after his removal was announced “banks started to worry that the company was going into bankruptcy.”
Shi said he didn't know if his removal was related to the bond payment due this month because of his exclusion. Stakeholders have been seeking him out since his exclusion, he said.