Sinovel to raise cash as offshore deadline approaches

CHINA: China's largest wind turbine maker Sinovel plans to issue corporate bonds of up to CNY 5.8 billion ($892 million) for a term of no more than ten years.

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In a statement, Sinovel said money raised from the corporate bonds would be used to displace bank loans, lower financing costs, improve financing structure and supplement operating funds.

However, industry insiders believe the main motivation behind the move is that Sinovel is both under pressure to complete 600MW of offshore wind projects it won through public tender last year and to win new concession projects next year.

In October 2010, Sinovel won two offshore wind-power projects in Binhai and Sheyang, east China’s Jiangsu province.

In the second half of this year, China will launch the second public tender for offshore wind-power concession projects, estimated to take place in Jiangsu province, too. The result will be announced in the first half of next year.

To boost its offshore business, Sinovel decided to alter the direction of funds raised from the Shanghai Stock Exchange seven months ago.

The CNY 1.032 billion was originally assigned to two projects in Dalian, north-east China’s Liaoning province. It will now go to two new projects in Jiangsu province.

The two Dalian projects, based in Changxing Island, were meant for wind-turbine shipping base and tower production respectively. The two new projects in Jiangsu are also for turbine shipping base and tower production, based in Yancheng, which demand a total of CNY 1.217 billion.

Sinovel raised CNY 9.459 billion when it went public at the Shanghai Stock Exchange in January this year.

On May 30 this year, Sinovel spent around $30 million buying up shares in developer Huaneng Renewables.

Sinovel has recently signed a $2.2 billion cooperation agreement with Mainstream Renewable Power to jointly develop, construct and run a 1GW wind-power project in Ireland over the next five years.

In the first quarter of this year, Sinovel’s financial expenses amounted to CNY 4.394 million, compared with CNY 66.69 million for 2010.

In the first three months, Sinovel made short-term borrowing of CNY 1.82 billion.

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