Suntech Power Holdings Co. Ltd. has initiated an investigation into a security interest the company received in connection with its investment in Global Solar Fund SCA, Sicar (GSF). Based on recent reviews and inquiries, Suntech suspects that the collateral related to the security interest may not have existed and that the company may have been a victim of fraud.
In May 2010, Suntech guaranteed payment obligations related to finance facilities provided to an investee company of GSF in the amount of approximately 554.2 million euros. As security, Suntech received a pledge of German government bonds in the amount of 560 million euros from GSF Capital Pte. Ltd., a third-party investor of GSF.
Suntech says its outside counsel recently noted certain facts and circumstances suggesting that the 560 million euros in bonds may not have existed.
‘There is no indication that management had any involvement, and we are vigorously pursuing all avenues to resolve this matter and ensure that we protect the interests of our shareholders,’ says Zhengrong Shi, Suntech's chairman and CEO, adding that the company's day-to-day business is not expected to be affected by the investigation.
