Solarfun Power Holdings Co., Ltd. (NASDAQ:SOLF), a vertically integrated manufacturer of silicon ingots and photovoltaic (PV) cells and modules in China, announced several major business developments.
Jiangsu Linyang Solarfun Co., Ltd, a 100% subsidiary of Solarfun (Linyang Solarfun), has entered into a long-term polysilicon supply agreement with Jiangsu Zhongneng Polysilicon Technology Development Co., Ltd., a subsidiary of GCL Silicon Technology Holdings Ltd.
Solarfun has also entered into an agreement to purchase the remaining 48% stake in Jiangsu Yangguang Solar that it did not own.
Under an agreement dated June 22, 2008, GCL Silicon Technology will supply Solarfun with virgin polysilicon sufficient to produce approximately 1.2 gigawatts (GW) of solar modules in aggregate over eight years. Deliveries begin immediately. This agreement provides further security for the company’s ability to meet its polysilicon needs and reach its target of 160 to 180 megawatts (MW) of module shipments in 2008.
On June 23, 2008, Linyang Solarfun also entered into an agreement to acquire the remaining 48% equity interest in Jiangsu Yangguang Solar Technology Co. Ltd. from Nantong Linyang Electric Power Investment Co., Ltd. (as to 18%), Jiangsu Qitian Group Co., Ltd. (as to 20%), and Jiangsu Guangyi Technology Co., Ltd. (as to 10%) for an aggregate consideration of approximately RMB355 million (US$51.5 million), to be paid in installments.
As Linyang Electric is 70% owned by Solarfun’s founder, Chairman and significant shareholder, Mr. Yonghua Lu, this transaction was also separately approved by the company’s audit committee, which is composed entirely of independent directors. Linyang Solarfun had previously acquired a 52% equity interest in Yangguang Solar Linyang Electric in August 2007. The latest agreement will allow Linyang Solarfun to acquire the remaining stake and take full control of the company.
Yangguang Solar is engaged in silicon ingot production. It is expected to rapidly expand production capacity to 200MW by year-end 2008 and 300MW by year-end 2009.
"This agreement is a significant development for Solarfun," said Mr. Hoskens. "It is key to further advancing the execution of our vertical integration strategy. It will better enable Solarfun to align silicon specifications and quality along the value chain to bring the best value products to our customers."
About Solarfun
Solarfun Power Holdings Co, Ltd. manufactures silicon ingots and PV cells and modules and supplies solar system integration services in China. The company produces both monocrystalline and multicrystalline silicon cells and modules. Solarfun sells its products through customers located in many countries. The company was founded in 2004 and its products have been certified to TUV and UL safety and quality standards.
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