Sat, Jan 13, 2018 - Page 12 News List

Government to help fund solar merger

‘WINNING FORMULA’:The merger of Neo Solar, Gintech and Solartech Energy into United Renewable Energy Co would help them diversify into solar system installations

By Lisa Wang  /  Staff reporter

Neo Solar chairman Sam Hong, right, speaks at a news conference in Taipei yesterday.

Photo: CNA

Solar cell maker Neo Solar Power Energy Corp (新日光能源) yesterday said it has received government support to finance a three-way merger in the latest restructuring efforts — worth NT$5 billion (US$168.92 million) — to boost profitability by penetrating all levels of the solar supply chain.

It is a strategy created by Neo Solar and local partners Gintech Energy Corp (昱晶能源) and Solartech Energy Corp (昇陽光電) to counteract price volatility in the solar cell market by rapidly diversifying into a lucrative solar system installation business.

“We are not forming a big solar cell alliance,” Neo Solar chairman Sam Hong (洪傳獻) told a media briefing yesterday. “We are creating a different business model — a winning formula — via this three-in-one merger.”

Within five years after the merger, the new entity, which is to be named United Renewable Energy Co (UREC, 聯合再生), seeks to generate between NT$90 billion and NT$100 billion in revenue, almost doubling current revenue of NT$50 billion, Neo Solar said.

The solar system installation business would be the greatest source of revenue at about 50 percent, while solar cell and solar module businesses would constitute the remaining 50 percent, the company said.

UREC aims to build solar power plants with a capacity of 1 gigawatt (GW) each year past the initial five-year period, said Gintech president Pan Wen-whe (潘文輝), who is to serve as chief executive officer.

The merger should be completed in the third quarter of this year, Hong said, adding that he did not expect the merger to face major obstacles from the world’s competition watchdogs as the new company would only install 5GW of solar cell capacity a year.

Hong’s remarks about creating a new business model is aimed at alleviating public concern that the government’s investment might end up with a zero return as all three solar cell makers are struggling to make a profit amid steep pricing competition from China and anti-dumping probes from the global community.

The government might inject more capital than the NT$4 billion fund into UREC through the government’s National Development Fund and government affiliate Yao Hua Glass Co (耀華玻璃).

The government fund and Yao Hua would each hold through a private placement less than 6.5 percent of the company’s shares, because the government wants to play a smaller role than UREC’s biggest private shareholder, Delta Electronics Inc (台達電), which is to hold a 6.5 percent stake.

UREC also plans to raise additional funds by issuing new shares.

The company is to concentrate on installing solar systems for clients, while manufacturing solar cells, solar modules and solar wafers at lower costs due to falling raw material sourcing costs and better productivity, Hong said.

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