The board of Nasdaq-listed PV module manufacturer Hanwha Q Cells is mulling a proposal by parent company Hanwha Solar Holdings to take the company back into private hands.
The Korea-based Hanwha Solar Holdings, a subsidiary of Hanwha Chemical Corp, has made an offer of $9 per American depositary share – each of which is a bundle of 50 ordinary shares – for the stock it does not already control. That represents a premium on the $6.60/ADS share price at Thursday's close.
Hanwha Solar Holdings also offered $0.18 per outstanding ordinary share.
A spokesperson for the company told pv magazine the cost of taking ownership of the outstanding share capital back in house would be around $45 million.
Volatile share price
The module maker's shares have followed an erratic path not uncommon in the industry this year, hitting a 2018 peak of $8.67 on February 26, sliding to $7.03 on June 1 – the day after the Chinese government prompted global turmoil by announcing its intent to rein in solar subsidy spending – and hitting a low of $5.43 on July 5.
With the share price recovering since then, the private ownership proposal may indicate confidence the module maker is on the rebound, although removing the company's public listing would also mean less scrutiny of the company's financial health at a time when solar manufacturers are bracing themselves for the double whammy of a shrinking market and Chinese oversupply forcing down product prices.
The company told pv magazine: “In order to continue manufacturing and supplying top quality solar products to global markets, the management team at Hanwha Chemical Co., Ltd. has decided to undergo an organizational change that will allow Hanwha Q Cells to more efficiently respond to market dynamics.
“The proposed transaction from Hanwha Solar Holdings to acquire all outstanding shares of Hanwha Q Cells will enable the company to deliver sharper focus on our R&D and technological leadership objectives. We foresee that the ‘going private’ proposal can support these goals and augment Hanwha Q Cells’ ability to continue driving quality standards.”
This article has been amended to include Hanwha Q Cells' clarification the repurchase of the outstanding ordinary shares would also encompass the acquisition of the company's ADS' – each of which is 50 ordinary shares – and therefore the cost of the ‘going private' transaction would be around $45 million, rather than $92.3 million, as previously stated.
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What does this mean to loyal shareholders who held these shares for so long with a hope of success?