Perceptions of Suntech may have been hit during last year’s fraud scandal, but this week they were battered – and then fried.
The Chinese-based solar group captured global attention in mid-2012 after admissions it may have been defrauded to the tune of $690 million. While the eventual cost to Suntech has been substantially scaled back, the red ink has kept flowing on the company’s financial reports as the manufacturer struggles to counter severe price weakness in the solar sector. Now, a boardroom battle is brewing after the company’s founder and former chief executive was ousted as chairman by the board.
Zhengrong Shi, a former Forbes ‘rich lister’ whose wealth reportedly hit as much as $2.9 billion, believes the board’s decision to remove him as chairman – he was retained as a director – is unlawful. In a statement on the matter, he said:
"The board’s decision to purportedly remove me was misconceived and unlawful. The board had no legal basis for doing so, and the decision was invalid and of no effect. The actions taken at this time by the rest of the board show that they are not focussed on the issues most important at hand and are not acting in accordance with the best interest of the company."
"I am fully committed to continuing to serve the company as executive chairman to the best of my ability and to guide it through these difficult times."
The statement was released a day after Suntech informed its investors a new chair had been appointed, with immediate effect.
There are murmurings the move may be a precursor to a possible sale of the company, a rumour covered on Climate Spectator several months ago.
There will be plenty more speculation while the boardroom fight continues to simmer, but regardless of what happens, there are significant problems at the company.
Chief among those is a $541 million credit line that expires next Friday, for which Shi believes they have no plans to refinance.
Interestingly, Shi told the Wall Street Journal he had been barred from negotiations with Suntech's bondholders and on discussions regarding refinancing for over a month. Being chairman and the face of the company, that is mind-boggling and a sign of severe strain in boardroom relationships.
The man behind Suntech
Referred to by many as the ‘Sun King’, Chinese-born Australian businessman Shi has been ever present in the solar sector since he burst onto the scene early in the new millennium.
Shi’s wealth has fallen dramatically, however, since the heady days of 2007, but with assets reportedly of around $100-$200 million, he is still worth more than most could dream to see in a lifetime. His majority shareholding in Suntech alone is currently worth close to $70 million.
Upon his departure as chief executive in August, Shi pointed out a list of achievements that is quite staggering:
"In (the last 11 years), we grew our manufacturing operations from one employee to 15,000; from 10MW to over 2,000MW of production capacity; from $US10 million to $US3 billion in annual revenue; and from serving customers in one market to dozens.”
It is these facts that saw him recognised by such monikers as the ‘Sun King’, ‘Mr Sunshine’ and ‘China’s Sunshine Boy’. But it was what he alluded to as "growing pains” in his farewell blog last year that will define the next decade at Suntech, if indeed it lasts that long.
"We had to accomplish in a decade what many told me would take a century. Some believe that we grew too fast; and certainly, you can’t achieve what Suntech has achieved without some growing pains. But the world couldn’t afford to wait a hundred years to solve our planet’s energy and environmental crisis.”
The Sun King mightn’t live on through the exploits of Suntech for very long, but it is what he has done to bring about the rapid uptake of solar PV across the world that will be his lasting legacy, regardless of where he heads from here.
Read more: http://live.acquia.businessspectator.com.au/article/2013/3/8/climate/climate-spectator-billionaire-bust-shi’s-suntech-woe#ixzz2N76l3X9t