China’s CSI Solar Plunges on Plan to Transfer Control of US Assets, Their Suppliers to Its Canadian Parent Firm

(Yicai) Dec. 1 -- Shares of CSI Solar dropped after the Chinese photovoltaic module and battery energy storage manufacturer said it plans to transfer the control of its assets in the United States, as well as their overseas suppliers, to its parent firm Canadian Solar.CSI [SHA: 688472] closed down 6.9 percent at CNY16.01 (USD2.26) in Shanghai today.CSI and Canadian Solar will establish two joint ventures to operate the former’s US solar and energy storage businesses, with CSI holding a 25 percent stake and Canadian Solar the remaining 75 percent stake, the Suzhou-based firm announced yesterday. The JVs will operate the assets through a leasing model.The move aims to ensure long-term engagement in the US market, maintain normal operations, reduce business risks, and maximize the protection of the interests of both the company and its shareholders, CSI noted.CSI also plans to restructure its three overseas factories that supply the US market into the same 25:75 structure with Canadian Solar as the JVs. The three plants are a solar wafer facility and a battery manufacturing base in operation, and an energy storage factory under construction.According to the arrangements, CSI will receive a one-time consideration for the equity transfer, which equals CNY352 million (USD49.8 million) based on an overall asset valuation of CNY469 million, and will enjoy returns of 25 percent.Once the deals are sealed, Canadian Solar will focus on the production, sale, and services of solar modules and energy storage systems in the US market, targeting local public utilities, power companies, and large commercial and industrial projects. Meanwhile, CSI will cover non-US regions, including Europe, Latin America, Asia, and the Middle East.Finally, CSI also plans to provide Canadian Solar with a counter-guarantee limit of no more than CNY44.6 billion (USD6.3 billion) to support the latter in providing performance and financing guarantees for CSI and its holding subsidiaries.In 2015, CSI entered the US market by acquiring local PV power plant developer Recurrent Energy. It invested USD250 million to build a 5-gigawatt module factory in Texas in 2023, which started production that year. Also in 2023, the company announced it would spend USD839 million on a 5 GW battery factory in Indiana, with plans to start production this year. In September last year, CSI announced an investment of USD712 million to establish an energy storage battery factory in Kentucky.CSI reported a revenue of CNY31.3 billion (USD4.4 billion) in the third quarter, down 8.5 percent from a year earlier, ranking fifth among its 23 Chinese competitors. Its net profit shrank 49 percent to CNY989 million in the period, ranking second.Editor: Futura Costaglione