UPDATE: Sunpower shares rebound after issue with major shareholders’ collateral shares

Singapore one dollar bill

Sunpower Group, which had halted its shares earlier this week after their recent tumble, announced Thursday that two substantial shareholders had informed the company on 3 November they had placed 14 million shares each with a lender, America 2030 Capital Ltd., as collateral for a loan, and said the shares were no longer in the depository broker account.

Guo Hongxin, executive chairman of Sunpower, and Ma Ming, executive director, each placed the shares, which are around 1.89 percent of the company’s total issued shares, as collateral to a depository broker designated by the lender, America 2030 Capital, Sunpower said. Guo and Ma’s loans was for their personal use, Sunpower said. 

Val Sklarov, president and CEO of lender America 2030 Capital, explained in an email to Shenton Wire that the shares weren’t in the account because the borrowers hadn’t complied with the terms of the loan since its execution in June. “The collateral was forfeited due to borrowers’ failure to pay the amounts owed to lender in accordance with the loan agreements,” Sklarov said, adding there were repeated attempts to renegotiate over a five-month period. 

America 2030 says it will seek resolution via an arbitration panel as called for in the loan agreement, Sklarov said, noting there was a break-up fee in the agreement.

Shenton Wire emailed a request for comment from Sunpower and from Guo and Ma via Sunpower; the parties didn’t immediately respond.

Sunpower said it had requested a trading halt of its shares Monday, 5 November, once it was told of the matter. On 1 November, in response to an SGX query regarding the shares’ drop in price to as low as S$0.28, off levels as high as S$0.58 at the beginning of October, Sunpower had said it wasn’t aware of any development that could cause the recent volatility. 

“The company remains fully operational,” Sunpower said on Thursday, the same day it requested a resumption of trading on its shares.

Friday, after resuming trade, the shares surged 25.37 percent to S$0.42 by 2:00 P.M. SGT.

Sunpower said in a filing to SGX Thursday that it was “given to understand” that Guo and Ma have engaged legal advisors and have begun legal proceedings in the Supreme Court of Singapore to seek the return of the collateral shares as they “have been transferred or otherwise dealt in, between 25 October 2018 to 5 November without the authority of, consent by or notice to the borrowers” of the loan.

“The borrowers have a basis, albeit inconclusive, to suspect that these transfers and/or dealings in were carried out on the instructions of America 2030,” Sunpower said.

“We can’t comment on details if litigation will possibly take place,” said America 2030’s Sklarov, “… nor can we communicate through the media as to the status of our clients confidential accounts.”

Shenton Wire sent an emailed request outside of office hours for comment from Sunpower and from Guo and Ma via Sunpower; the parties didn’t immediately respond.

On Thursday, the Singapore court granted an injunction to prevent America 2030 and its agents from “selling, forfeiting, transferring and/or otherwise dealing in,” the collateral shares, or any proceeds therefrom,” Sunpower’s said in its filing.

On America 2030’s website under the section discussing its loan program, the company says it offers loans using publicly listed shares as collateral with interest rates between 3 percent to 6 percent, with loans of up to 80 percent of the value of the stock disbursed within three weeks.

Until a loan has been repaid, “the shares will be kept safe in the client’s name in a custodian bank. The shares will not be reassigned, sold, traded or transferred,” America 2030’s website said, adding that they also wouldn’t be sold short. “A securities loan is a very safe and transparent process,” it said.

Guo has an interest in an aggregate 147.72 million Sunpower shares, or around 19.98 percent of the total, while Ma has an interest in 128.54 million shares, or 17.39 percent of the total issued shares, it said. The two told Sunpower that none of their other shares have been pledged or encumbered in any way, the filing said.

This article was originally published on Friday 9 November at 12:38 A.M. SGT; it has since been updated with additional comments from Val Sklarov, president and CEO of America 2030.