Suntech says fraud to cut 2010 profit by $60 mln-$80 mln

Fri Dec 7, 2012 9:29am EST

Dec 7 (Reuters) - China-based Suntech Power Holdings Co Ltd said it had concluded that it had been defrauded by a partner in a solar development fund, which would require it to reduce its net income for 2010 by between $60 million and $80 million.

However, the No. 1 solar panel maker said the impact on its 2011 and 2012 net income would be "immaterial".

The scandal involves investment fund GSF Sicar, a Luxembourg-based company that develops solar power plants.

The fund is 80 percent owned by Suntech and 10 percent by Zhengrong Shi, who founded Suntech in 2001.

The allegation relates to a minority shareholder, GSF Capital PTE, which owns the remaining 10 percent of the fund.

Suntech said it had concluded that a security interest it received from GSF Capital in connection with financing of Italian solar projects did not exist.

The company said in July that $700 million in German bonds pledged as collateral may not exist.

It said on Friday that it was now required to record a guarantee obligation higher than the prior obligation of $3 million.

Suntech shares have fallen 36 percent since market close on July 30, when the company said it might have been the victim of a fraud. Most solar stocks have lost more than half of their value this year due to supply gluts amid weak demand.

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