Emeren Group Ltd - 20-F filing on 2018-04-30

DISCONTINUED OPERATIONS

12 Months Ended

Dec. 31, 2017

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure

3. DISCONTINUED OPERATIONS

On September 25, 2017, the Company completed a share repurchase and subscription agreement (the “SPA”) with Mr. Xianshou Li, the Company’s Chairman and Chief Executive Officer (the “Buyer”) for the sale of the Company’s manufacturing (including polysilicon, solar wafer, solar cell and solar module manufacturing) and LED distribution businesses. The transaction also transferred substantially all of the Group’s related indebtedness to Li. The transaction resulted in:

The Company was no longer be liable for the bank borrowings approximating RMB3 billion ($461 million) which was assumed by the Buyer as part of the net assets of discontinued operations as of the disposal date;

The Buyer forgave approximately $217.4 million of intercompany payables owed to it by the Company; and

The Company issued 180 million ordinary shares (“18 million ADS”) with a fair value of approximately $42.5 million to ReneSola Singapore Pte. Ltd., an entity to be fully owned by the Buyer upon completion.

Assets and liabilities related to the discontinued businesses were reclassified as assets/liabilities held for sale as of December 31, 2016, while results of operations related to the discontinued businesses, including comparatives, were reported as loss from discontinued operations.

A reconciliation of disposal gain is presented as follows.

Reconciliation of disposal gain:

Item	Amount in US$ million
Waiver of the Company’s payable to the Buyer of the discontinued operations		217.4
Fair value of shares issued to the Buyer		(42.5)
Net assets of discontinued operations as of the disposal date		(133.6)
Release of currency translation difference due to discontinued operations		65.0
Disposal Gain		106.3

Results of the discontinued operations

					January 1 – September 30
	2015		2016		2017

Revenues	$	1,165,700,510	$	849,331,555	$	472,568,586
Cost of revenues		(1,000,861,822)		(747,068,354)		(457,058,538)

Gross Profit		164,838,688		102,263,201		15,510,048

Operating (expenses)/income:
Selling and marketing		(72,061,281)		(46,914,631)		(24,259,869)
General and administrative		(51,896,423)		(44,629,891)		(32,341,022)
Research and development		(43,905,312)		(27,286,652)		(14,715,027)
Other income		16,009,232		3,771,645		8,776,633
Impairment loss of assets		-		(4,624,979)		-
Total operating expenses		(151,853,784)		(119,684,508)		(62,539,285)

Income/(Loss) from operations		12,984,904		(17,421,307)		(47,029,237)

Interest income		2,836,225		2,349,791		1,144,135
Interest expenses		(41,418,331)		(32,097,477)		(25,518,288)
Exchange (loss)/gain		(935,402)		9,945,642		(7,095,061)
Gain/(losses) on derivatives		1,941,019		4,592,125		(1,284,379)
Loss from discontinued operations before income taxes		(24,591,585)		(32,631,226)		(79,782,830)
Income tax (expense)/benefit, net		(696,807)		(2,161,507)		4,748,324

Loss from discontinued operations, net of tax	$	(25,288,392)	$	(34,792,733)	$	(75,034,506)

Assets and liabilities of the discontinued operations

	December 31, 2016
Assets
Cash and cash equivalents	$	33,371,486
Restricted cash		95,861,139
Accounts receivable, net of allowances for doubtful accounts		72,732,734
Notes receivable, net - third parties		43,858,319
Inventories		143,975,999
Advances to suppliers-current		10,722,586
Amounts due from related parties		13,065,625
Prepaid income tax		1,020,676
Prepayments and other current assets		19,315,500
Derivative assets		2,715,736
Assets held-for-sales		7,558,218
Total current assets		444,198,018

Property, plant and equipment, net		471,096,623
Prepaid land rent, net		31,850,188
Deferred tax assets, non-current		15,391,396
Restricted cash – non current		429,706
Other long-lived assets		15,085,774
Total non-current assets		533,853,687
Total assets of the discontinued operations		978,051,705

Liabilities
Short-term borrowings from third parties		595,433,960
Notes payable - third parties		223,302,995
Advances from third parties		21,493,334
Amounts due to related parties		1,257,367
Other current liabilities		53,774,987
Income tax payable		221,397
Total current liabilities		895,484,040

Warranty		35,058,973
Deferred gain		20,824,155
Other long-term liabilities		865,964
Total non-current liabilities		56,749,092
Total liabilities		952,233,132
Net assets	$	25,818,573

Note:

The intercompany receivables of US$173.4 million due from the continuing business were excluded from the Assets and liabilities of the discontinued operations table above.