Hong Kong’s markets regulator confirmed it’s investigating Hanergy
Thin Film Power Group Ltd., brushing aside a denial from the chairman of
the solar company that a probe was underway. “A formal investigation into the affairs of Hanergy Thin Film Power
Group Ltd. has been active and is continuing,” the Securities &
Futures Commission said Thursday in a statement.
It’s rare for the SFC to discuss a probe before a formal prosecution
is launched. It came hours after Li Hejun, founder and principle
shareholder of Hanergy, gave an interview to the Xinhua news agency
saying that he wasn’t aware of any probe into the stock and that if
there was one he should know. “It’s unusual because all SFC investigations are supposed to be
confidential and everybody under investigation has a secrecy
obligation,” said Eric Seto, a partner at Morley, Chow, Seto Solicitors,
who works on criminal SFC prosecution cases.
Hanergy is under the spotlight after its shares crashed on May 20, tumbling almost 50 percent in about half an hour
before trading was suspended. The company’s market value at one point
before the plunge exceeded HK$300 billion ($39 billion) more than the
value of household names such as Sony Corp. and Twitter Inc.
Unusual Step
The SFC has broken its silence on at least one other occasion, in
March 2009 when it announced an ongoing investigation into the trading
of HSBC Holdings PLC shares. Li has drawn criticism for skipping Hanergy’s annual general meeting
in Hong Kong on the day of the crash in favor of delivering a speech at
the opening of a solar exhibition center in Beijing.
Even before Hanergy Thin Film’s shares plunged, the solar manufacturer’s business model was under scrutiny. Hanergy makes thin-film solar panels
using equipment from Hanergy Thin Film. In January, the Financial Times
newspaper questioned why the bulk of Hanergy Thin Film’s sales were to
the Beijing-based parent, Hanergy Holding Group Ltd. Trading patterns in Hanergy’s shares, the company’s production
levels, borrowings and relationships with lenders have also been
questioned.
Trading Suspended
Hanergy’s shares are currently halted in Hong Kong, and Hanergy Thin Film has yet to officially address the decline. Even with Hanergy’s decline, the company is still valued at HK$163 billion, more than four times bigger than First Solar Inc., the biggest U.S. solar company using thin-film technology. First Solar and Japan’s Solar Frontier K.K. dominate the market for thin-film solar cells.
In an interview in March, Li called the company’s investments
cautious and said the run-up in the stock was validation of the
solar-maker’s focus on a new era of mobile energy. “All of our plants, if reporters can go and see, are putting on extra
shifts and are in full production,” Li said in the Xinhua interview.
“We’re in big production. It’s very, very, very good. Hanergy is in its
best shape since it started.”
©2015 Bloomberg News
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