Embattled Chinese solar panel maker Suntech can’t seem to catch a break. In the latest setback for what was once the world’s biggest solar manufacturer, Suntech said yesterday that an Italian court has seized solar farms operated by customers of a scandal-plagued European venture owned by the company.
The venture, Global Solar Fund (GSF), financed the solar installations that deployed—surprise!—Suntech solar panels. Italian authorities have been investigating Suntech and the solar power plant operators over allegations that the projects improperly collected lucrative government subsidies.
A court in Brindis, Italy, seized 37 solar power plants accounting for 21% of GSF’s portfolio as well as the government payments received by the projects for the electricity they generate. “As consistent with Italian legal proceedings, several people have been served pre-trial detention orders,” Suntech stated yesterday in a regulatory filing.
The GSF imbroglio precipitated Suntech’s downfall when the company revealed last year that a Spanish partner in the joint venture had possibly defrauded the company of €560 million ($757 million), leaving it responsible for a €554.2 million ($747 million) loan guarantee to a Chinese bank. (That admission raised eyebrows, since Suntech effectively had voting control of GSF, and sales of Suntech panels accounted for 6.9% of Suntech’s net revenues in 2009.) With more than a billion dollars of debt on its books, the additional liability prompted Suntech to default on $541 million in bonds earlier this year. In March, Chinese banks that hold $1.4 billion of that debt forced Suntech’s China operations into bankruptcy.
With the bankruptcy case dragging on, Suntech’s board of directors ousted David King as chief executive on Sept. 13. King, the company’s former chief financial officer, last year replaced Zhengrong Shi, Suntech’s founder and once China’s richest man. The new chief executive is Weiping Zhou, who most recently served as chairman of Guolian Futures, a unit of Wuxi Guolian Development Group, a local government-owned conglomerate.