GREEN DEALS: Too big to fail?

Suntech Power

It seems a Green Deals column this year wouldn’t be complete without mention of Suntech Power and the fascinating – tending to tragic – tale of one of solar’s biggest players.

Today the news again is rather bleak. Being a little experimental, we might start with the facts.

The share price of the company – which was already low – has taken a massive hit this week. The company has lost close to half its value in the first four trading days of this week and overnight was issued a ‘please explain’ from the New York Stock Exchange in search of an explanation of the drop.

“As reported by the company on March 11… it has entered into a forbearance agreement with holders of over 60 per cent of its 3 per cent convertible notes, for which a principal payment of $US541 million is due on March 15,” Suntech responded in a statement.

“The company does not plan to make such payment and the company's management is not aware of any pending or planned actions or claims in relation to such non-payment by the trustee or the holders of the notes. As previously disclosed, the company plans to continue to work with holders of the notes with a view to achieving a consensual restructuring.”

Now to the rumours, and the latest is that a default is “likely”. This was the call of a New York-based Maxim analyst widely quoted in the press. "We believe Suntech's day of reckoning is at hand with no legal deal to defer maturity, principal unlikely to be paid, and bondholders set to file involuntary bankruptcy this Friday," Maxim Group analyst Aaron Chew informed clients, according to Reuters.

Not surprisingly Chew rates Suntech a ‘sell’, with a less than optimistic 12-month target price of $US0 ($A0).

This comes as there’s quotes from Chinese officials saying a bailout is not on the cards. One suspects the Chinese government won’t allow such a key player in a strategic industry to simply go under so something is likely to eventuate, albeit perhaps Suntech might be scaled back with some assets sold off.

This latter point ties in with another of the rumours circulating, that a partial, government-backed takeover of the group is imminent. According to the New York Times, the municipal government’s holding company in Suntech’s hometown, Wuxi, China (Wuxi Guolian) is set to take partial or full control.

Fact or fiction? Tonight we just might find out.

Powershop/Meridian Energy, Infigen Energy

Moving to new entrants in the energy retail space, where there’s been a bit more action.

Last year New Zealand’s Meridian Energy entered the Australian market through testing of its innovative online energy retail offering, Powershop. It started trials to a small group of customers in Victoria in the middle of last year, and has just started expanding in Victoria. A national rollout, meanwhile, is expected within 12 months.

Meanwhile, renewable energy group Infigen Energy has received a retail licence for subsidiary Infigen Energy Holdings as expected.

The approval from the Australian Energy Regulator came after there were no submissions from the public against (or for) the plan.

Infigen is looking to expand its business through retailing electricity to large customers, which is similar to the plan of another large Australian renewables player Pacific Hydro.

As we’ve mentioned before, the push into retail is a direct response to the challenges of signing power purchase agreements with the ‘big three’ retailers. The major difference between the three major wind power players however, is that Pac Hydro and Infigen are focusing on large customers while Meridian is targeting households.

Panax Geothermal

Last month we brought you news of a capital raising and cash-strapped Panax geothermal. That raising – 150 million new shares to be created at the tragic price of just $0.0015 per share – has been deferred, with the company now hoping to raise the cash next month. It’s not a good look for a company whose shares aren’t even worth a cent.

What went on is a mystery, but two hours after the market was informed of the delayed raising on Wednesday, managing director Kerry Parker stepped aside.

Parker will remain in his current role until April 30 as a transition to a yet unnamed person takes place. He will also remain on the board as a non-executive director until August 30.

The move comes on the back of sweeping changes to the Panax board last month when Stephen Evans and Ian Reid stepped aside, replaced by Athan Lekkas, David Wildy and Michael Clarke.

“The Board expresses its appreciation for Kerry’s contribution in shaping and advancing Panax’s position as an Australasian geothermal exploration and development company,” Panax Chairman Athan Lekkas said.

Regardless of who is in charge, the company had better find some cash soon based on yesterday’s release of its half-year results.

“Should the group not be successful in raising additional funding by capital raisings or other alternative funding arrangements fail to eventuate, there is uncertainty as to whether the group will be able to continue to operate as a going concern,” auditors Pitcher Partners said.

ARENA

An ARENA-backed study run by the Almond Board of Australia has found that 20 per cent of the industry’s husk and shell waste could be used to offset its energy demand. This would be done by matching it with the availability of feedstock and technology costs.

The Almond Board received $32,000 from ARENA’s Emerging Renewables Program to put toward the $60,000 study.

The study could lead to the sector:

-- Undertaking a site specific feasibility study;

-- Running a trial to better understand the technologies that can be used to turn the shell and husk feedstock into energy; and/or

-- Running an integrated, site specific project to meet onsite and local supply and demand.

“This study is an excellent start to keeping the production of almonds in step with community expectations around industry sustainability,” resources minister, Martin Ferguson, said.

“The study also highlights the importance of industry undertaking proper monitoring of its energy use, which will in turn help it to make energy efficiency improvements across the almond production process.”

Fisker Automotive

The founder and executive chairman of Fisker Automotive, Henrik Fisker, has quit after battling with the hybrid car maker’s top executives over strategy.

Fisker founded the firm with Barny Koehler in 2007, but has met with a series of troubles. Currently the firm is looking for a new backer to take a stake in the company and help it get a new car on the road as well as gets its only model (Karma) back on track.

"The main reasons for his resignation are several major disagreements that Henrik Fisker has with the Fisker Automotive executive management on the business strategy," the email outlining the development said, according to Reuters.

Famous for the plug-in hybrid ‘Karma’, which sells for over $100,000 and was released in late 2011, Fisker has seen a number of shifts in its executive ranks since early last year, including two CEO changes.