State-owned Panda Green set to bank more public funds

Debt-saddled, state-owned solar developer Panda Green has revealed a sizable chunk of the money it intends to raise from the sale of 636 MW of renewable project generation capacity in China will come from Beijing.

The Xinhua Electric Development and Investment Co Ltd which wants to spend RMB239 million (US$33.8 million) acquiring most of Panda Green’s stakes in 96 MW worth of wind power portfolios in Shanxi province is entirely state-owned. Xinhua Electric – which will have a further RMB12.5 million option of purchasing the final 5% Panda Green slice in one of the two wind portfolios – is 55% owned by the China National Nuclear Corporation and 45% by Xinhua Water Resources Holding Group Corporation Ltd.

Part of the transaction, which will involve Panda Green accepting a RMB40 million hit on its investment in the wind projects but taking any associated debt off its books, will depend on a vote by shareholders in the developer’s Changzhou Zhaolian Lvjing New Energy Ltd subsidiary.

More than 15% of the money which will finance a separate loss-making divestment, of 540 MW of Chinese solar generation capacity, will also come from state entities, Panda Green informed the Hong Kong Stock Exchange on Friday.

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Shanxi Silu Electricity Engineering Co Ltd will buy an eight-project, 270 MW Zhaolian Lvyi solar portfolio from a Panda Green subsidiary and Changzhou Zhaolian Lvchang New Energy Ltd will acquire an identical collection of projects with the two deals set to generate RMB199 million for Panda Green while crystallizing a RMB160 million loss for the developer.

Panda Green has now revealed New Energy Exchange Ltd is the ultimate owner of both purchasers and, as well as New Energy holding a 3.02% slice of Panda Green, the company is also partly state backed.

The CMTF Private Equity One fund which is 44.09% owned by Beijing’s China Merchants Group Ltd has a 13.62% interest in New Energy Exchange Ltd and China Merchants also owns all of the Snow Hill Developments Ltd entity which has a 9.07% stake in New Energy.

Those holdings ensure around RMB269 million of the RMB438 million Panda Green expects to bank from its loss-making sales will come from state coffers, with up to a further RMB12.5 million of taxpayers’ money on top, if Xinhua Electric-China Nuclear-Xinhua Water exercises its full share option.