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August 24, 2012Hanwha
Hanwha Chairman has got a sentence of 4 years to serve in jail after being found guilty of using company cash for personal use (all $4.5 million of it) and spending an additional $250 million to help his brother. Note Hanwha is one of the top 10 chaebols of South Korea and entered the Solar industry in a big way a few years ago. The conglomerate entered the green industry like other chaebols Samsung, Hyundai and LG prodded by the South Korean Government. But like other Korean groups, it has seen its investment in solar industry crash. Despite acquiring a head start by buying Solarfun (one of the biggest Chinese solar panel companies), the group has not managed to do much with it. Despite being plans of vertically integrating through building a polysilicon plant, the company’s solar business continues to lose money and trails badly behind others in all metrics like cost, margins, revenues etc.
South Korean Conglomerate Hanwha’s subsidiary Hanwha Chemicals has taken a controlling 49.99% stake buying 36 million shares from Solarfun, at $10.72 (4.6% premium) and the complete shareholding of promoters Good Energies (controls German Q-Cells as well ) and Chairman Mr. Yonghua Lu. Solarfun is the 4th largest Chinese company which has been executing well on a vertical integration strategy. The company has 900 MW of module capacity with ~400-500 MW of wafer and cell capacity. The company has rapidly increased its 2010 marketshare and is trading at trough valuations currently. The Buyout comes at a good time for the Hanwha Group as solar stocks are trading at 2010 P/E of mid single digits due the worries about oversupply in 2011. 2010 has proved to be a stellar year with global solar demand estimated to be in the range of 12-14 GW which would be a 80-100% increase from 2009. All the solar companies are sold out with prices increasing due to supply shortage.
South Korean Chaebols like LG and Samsung have already started solar manufacturing plants. Even Hyundai is expected to double the production of solar modules in 2011. Hanwha which is the 4th largest conglomerate in South Korea already has a 30 MW solar capacity and is looking to make major investments into Green Energy. This is driven by the South Korean Government which has spent huge amounts in Green Subsidies. Hanwha Group through this acquisition becomes the largest solar company in South Korea outdistancing the others at a comparatively small price of $370 million.
Now the CEO of the group is cooling its heels in jail, it looks unlikely that Hanwha will be able to increase its leadership position. Note South Korean chaebols are notorious for their owners being involved in white collar crimes and getting pardoned by the political leadership. Due to their extraordinary money and business power, the CEO’s of the chaebols have gotten away with murder quite literally. It remains to be seen whether the Hanwha CEO serves his 4 year jail term or not.
AP
The chairman of Hanwha Corp., one of South Korea’s largest conglomerates, was sentenced to four years prison and fined 5.1 billion won ($4.5 million) for embezzlement in a ruling that shows a tougher stance against wrongdoing by leaders of the country’s mightiest companies.
Kim Seung-youn used his influence over Hanwha affiliates to aid his brother’s near-bankrupt companies, which caused over 288 billion won ($254 million) in losses at the Hanwha-controlled businesses, Seoul Western District Court said in a statement Thursday. Hanwha is South Korea’s 10th largest chaebol as the country’s industrial conglomerates are known.