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Suntech's reality GAAP?
22 June 2010
US accounting principles were tightened post-Enron, however the ownership and control structure behind Suntech’s off-balance sheet treatment of its equity investment in GSF raises questions over whether they were tightened enough. Paul Smith investigates.
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[suntech]
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Global Solar Fund (GSF) is expected to draw down on a Eu140.8 million ($172.2 million) debt financing for 27.5MW of solar photovoltaic (PV) plants in Puglia in late-July – the first deal in what could be a 240MW portfolio of PV projects across Italy and Spain.
Drawdown will be a boost for investors in PV-manufacturer Suntech, which itself has an 86% stake in GSF and is listed on the New York Stock Exchange, because Suntech will be paid for some of the 40MW of solar modules it shipped to GSF’s investee/project companies in March 2009.
However, the deal is challenging. In addition to delays caused by the Italian Constitutional Court declaring Puglia’s permitting regime illegitimate, the ownership and control structure behind the project – which keeps GSF off of Suntech’s balance sheet despite Suntech’s 86% stake in GSF – appears overly complicated and inconsistent in its...
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