Canadian Solar considers going private

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In what appears to be a trend among Chinese solar manufacturers, Canadian Solar (NASDAQ:CSIQ) has announced a proposal by Qu to go private, which would result in its leaving the NASDAQ exchange.

The board received a preliminary, non-binding proposal letter on December 9 from Qu and his wife, Hanbing Zhang, in which they offer to buy the outstanding shares they do not own for $18.47 per common share.

Currently, Qu and Zhang are the largest shareholders, with around 23.5%.

Reuter’s reports that Canadian Solar’s shares, which have risen nearly 42% this year, have been halted in premarket trading. It adds that, according to its calculations, the compay has a market cap of $1.07 billion.

“I believe that my proposal of US$18.47 in cash per Common Share will provide a very attractive opportunity to the Company’s shareholders. This price represents a premium of approximately 7.1% to the Company’s closing price on December 8, 2017, and a premium of approximately 10% to the average closing price during the last 90 trading days,” wrote Qu in his proposal letter.

He added that he intends to form an acquisition vehicle to complete his proposal, and will finance the transaction with a combination of debt and equity capital.

“Equity financing is expected to be provided in the form of rollover equity in the Company from the Chairman Parties and cash contributions from the Chairman Parties and, potentially, third party sponsors. Debt financing is expected to be provided by loans from third party financial institutions.  I am confident that I can timely secure adequate financing to consummate the Transaction,” Qu continued.

In response, the Canadian Solar board has formed a special committee of independent and disinterested directors to consider the proposal.

Commenting on the news, solar analyst at Bloomberg New Energy Finance, Jenny Chase tells pv magazine, “We think that the reason for this is that Chinese solar stocks on U.S. exchanges are valued lower (in proportion to their profits, revenues etc.) than Chinese solar stocks on Chinese exchanges.

“This raises the possibility that the firms could relist later in China and raise more money/ realise profits for management. Or alternatively simply be free of the tedious requirements to submit quarterly filings, which take up management time and may distract the company from long term goals to make quarterly milestones.”

Canadian Solar posted revenue of $912 million in Q3 2017, significantly above the figure of $692 million in the previous quarter. The company also saw quarterly shipments rise to 1.87 GW. Net income, however, fell to $13.3 million, from $38.2 million the previous quarter. Revenue predictions for Q4, for both the manufacturing and energy businesses, total $1.77 billion

On November 20, JA Solar announced it had signed an agreement to cancel its listing on the NASDAQ stock exchange and go private in an all-cash transaction. Meanwhile, at the start of 2017, Trina Solar said it had completed the transaction that will allow it to become a private company.