Trina Solar audit committee chief resigns; stock drops
LOS ANGELES |
LOS ANGELES (Reuters) - Trina Solar Ltd said the chairman of its audit committee had resigned from its board, sending the Chinese solar company's shares down more than 11 percent.
Peter Mak resigned effective July 10 "to focus on other personal and professional pursuits," Trina said in a statement on Tuesday.
Mak is also chief financial officer of A-Power Energy Generation Systems Ltd, although his contract with the Chinese power plant developer is due to expire this week.
A-Power's independent auditor, MSCM LLP, resigned late last month because the company did not hire an independent forensic accounting firm to evaluate transactions, as required. Three of A-Power's directors have resigned since then, and the company has warned that it would delay its annual report to securities regulators.
"The bottom line is that Trina shareholders should be pleased that Mak with his checkered past has left the board," Raymond James analyst Pavel Molchanov said in a client note. "It is fundamentally erroneous to infer that Trina's accounting has been somehow flawed purely because of Mak's prior work at A-Power."
Jerome Corcoran, another Trina director, is replacing Mak as chairman of the audit committee, of which he was previously a member.
Trina stock was down 11.4 percent at $17.50, making it the second-biggest percentage loser on the New York Stock Exchange. The shares had hit a 13-month low earlier in the session.
"This certainly should raise alarm bells and make people a little more cautious," Morningstar analyst Stephen Simko said. "There is going to be a lot of focus on their accounting."
The news came a day after rating agency Moody's Investors Service raised warnings about accounting and corporate governance risks at dozens of China-based companies, leading to a sharp drop in their shares and bonds on Tuesday. Neither Trina nor A-Power was among the companies Moody's reviewed in the report.
Meanwhile, the implied volatility in Trina options surged on increased put volume after the news, said WhatsTrading.com options strategist Frederic Ruffy.
Implied volatility, a barometer of anxiety and a key component of an options price, measures in percentage terms the expected magnitude of share price movement.
Trina option volume was 7.8 times greater than average daily turnover with about 34,000 puts and 17,000 calls traded by early afternoon on Tuesday, according to options analytics firm Trade Alert.
Also on Tuesday, Trina said Yeung Kwok On, one of its directors, would replace Corcoran as chairman of the board's corporate governance and nominating committee. Board member Qian Zhao will replace Mak on that committee.
Trina's news came as a revenue and margin warning from Chinese wafer maker ReneSola Ltd sparked a sell-off in most solar stocks.
(Additional reporting by Doris Frankel in Chicago; editing by John Wallace and Lisa Von Ahn)
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