Polysilicon manufacturer GCL Poly today made the extraordinary announcement the 865 million shares it pledged to secure a loan for its solar project operation in 2019 are “more likely than not … no longer held by or on behalf of [its subsidiary] Elite Time or any other member of the group.”
Having announced, in May, it had uncovered the fact the disputed stock had been transferred out of the account of an unnamed depository broker in June last year, GCL today said the investigation firm it employed to look into the matter had found: “One of the key individuals associated with the lender has previously been accused of fraudulent conduct and been involved in other financial disputes. The alleged fraudulent conduct and disputes have involved other companies controlled by this individual, which signed master loan agreements with borrowers, but which, after taking in shares as collateral, allegedly failed to deliver the full loan amount [and] instead, purportedly, sold the collateralized shares in the market.”
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That appears to have been what happened to GCL, which has accepted the fact it has lost a big chunk of its holding in its GCL New Energy project business. pv magazine reported in May that without the missing shares, GCL controlled only 49.24% of the solar development operation.
As revealed by GCL earlier this year, its Elite Time Global Ltd subsidiary had, on August 28, 2019, pledged the shares as security for a $60 million loan from a lender which was today named as Bentley Rothschild Capital 5 Ltd. The lender reportedly confirmed, on September 26, 2019, it would supply three payments of $16 million plus a final sum of $12 million.
GCL said in May, only $2.2 million of the promised funds materialized, in February 2020, and the company discovered five months ago the shares, which had been transferred to the depository broker, had been transferred to the lender 11 months earlier, after Bentley Rothschild claimed the terms of the loan agreement had been breached.
GCL is yet to explain how the transfer of the stock went unnoticed for almost a year but today said investigative firm FTI Consulting (Hong Kong) Ltd could find no business history or physical office for Bentley Rothschild Capital 5 other than the address of the company secretary, in the Caribbean island nation of St Kitts and Nevis.
The polysilicon manufacturer today told the Hong Kong Stock Exchange it considers itself to remain controlling shareholder of the New Energy business and had decided not to pursue the matter further because of the potential costs involved and “the likelihood of receiving a meaningful recovery.” As previously reported by pv magazine, at the time of the loan arrangement the 865 million shares pledged by GCL were said to be worth $120 million.
Trading in GCL stock has been suspended since the end of March because of the company's inability to publish its full year accounts for 2020 after the previous auditor, Deloitte, walked away from the business over the issue of a RMB510 million ($79 million) pre-payment made in September 2019 to a state-owned entity, for a production facility which never took shape.
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