Boss sells firm’s stake at big discount in Hong Kong

Traders monitor price movements at the Hong Kong Stock Exchange in Hong Kong on December 8, 2010. The boss of Beijing-based solar energy firm Hanergy Thin Film Power Group, Li Hejun is selling a stake in the company at a massive discount at the Hong Kong Stock Exchange, as the once high-flying firm faces a continuing regulatory probe. PHOTO | MIKE CLARKE |  AFP

In Summary

• Hanergy grew more than six-fold to became the world’s largest solar power company by market value before dramatically suspending trading in May after its stocks plunged 47 per cent.
• Chairman of the firm Li Hejun - once China’s richest man - has agreed to sell a six percent stake at 0.18 yuan ($0.03), or 18 fen, per share, according to a shareholder disclosure filing to the Hong Kong stock exchange.
• Shares in the firm were trading at HK$3.91 before the suspension on May 20, meaning Li is shedding his stock at a 95 per cent discount.

By AFP
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HONG KONG, Tuesday

The boss of Beijing-based solar energy firm Hanergy Thin Film Power Group is selling a stake in the company at a massive discount in Hong Kong, as the once high-flying firm faces a continuing regulatory probe.

Hanergy grew more than six-fold to became the world’s largest solar power company by market value before dramatically suspending trading in May after its stocks plunged 47 per cent.

But even before that crash, questions were raised over its valuation and revenue sources.

SELLING SHARES

Chairman of the firm Li Hejun - once China’s richest man - has agreed to sell a six percent stake at 0.18 yuan ($0.03), or 18 fen, per share, according to a shareholder disclosure filing to the Hong Kong stock exchange.

Shares in the firm were trading at HK$3.91 before the suspension on May 20, meaning Li is shedding his stock at a 95 per cent discount.

Financial analyst Francis Lun of Hong Kong brokerage GEO Securities said investors in Hanergy should be pessimistic.

“The fact that he (Li) is willing to sell a big chunk of his shares at 18 cents (fen) shows he is in dire straits. Investors should prepare for the worst to get nothing at all in return,” he told AFP.

The date of the sale agreement for the 2.5 billion shares - worth HK$538 million ($69.4 million) - was given as December 21.

Hong Kong’s Securities and Futures Commission (SFC) launched an investigation into the company in May.

A spokesman told AFP on Tuesday the investigation was “ongoing” but had no further comment.

PROBE

In July Hanergy confirmed in a statement there was a “significant level of connected transactions” that had raised concerns with the SFC.

The collapse of Hanergy and some other top-performing stocks in the southern Chinese city’s stock market prompted critics to question regulators’ oversight.

It also came weeks before a market rout in China and a subsequent probe into China’s leading financial institutions, with executives being investigated.

A Hanergy spokesman could not be reached for comment Tuesday.

The company’s market value once topped HK$300 billion.

In February Li was named China’s richest man in a wealth survey, replacing e-commerce giant Alibaba’s founder Jack Ma.

(READ: Jack Ma of Alibaba becomes China's richest person)

But the May plunge lopped HK$144.3 billion from the firm’s value following the massive sell-off.