Why would a bankrupt, majority Chinese-owned, U.S.-based solar module producer file a trade complaint to limit cheap imports — especially when its Chinese majority owner opposed the effort?
Because Suniva's major creditor, SQN Capital Management, was bankrolling the trade claim in a byzantine plan to recover the $51 million it is owed for manufacturing equipment, according to reports.
Bloomberg reports that SQN said: “The case would disappear if Chinese companies bought $55 million in manufacturing equipment.”
So, by pushing a trade claim with the International Trade Commission (ITC) that could decimate the downstream solar market, SQN is threatening the industry in order to recoup its bad investment.
SQN was looking to sell Suniva’s module-building equipment for $55 million, stating, “And if that happened the company’s assets would be liquidated — leaving no one left to pursue the trade complaint.”
If the Chinese chamber of commerce paid the investor $55 million, “SQN would have no interest in providing additional funding to Suniva,” wrote SQN president Jeremiah Silkowski, according to Bloomberg.
SQN has reportedly stopped pursuing the sale.
PV Magazine's Frank Andorka asks if the ITC “will look kindly on a trade complaint that might be a thinly veiled attempt to cover up extortion.” PV Magazine embedded the SQN letter, which included SQN's deal demands and terms.
Without SQN's support, Suniva would no longer be a representative domestic industry participant, nor could it afford to pursue the case. That “representative” label is an important part of the language of the case and its absence could undermine Suniva's claim.
“Suniva’s petition appears to be less of an effort to protect a U.S. industry and jobs than a desire by speculators to recoup their failed investment,” submitted solar contractor Swinerton Renewable Energy in a filing to the commission, as reported by PV Tech.
George Hershman, the GM of Swinerton's solar group, said in an interview with E&E News: “It feels like a gross abuse of trade laws that are established to try to support U.S. industry.” E&E News also reports on the fight for the scraps of what was Suniva between Lion Point Capital, a hedge fund, and SQN.
Nancy Fischer, a partner at law firm Pillsbury Winthrop Shaw Pittman, interviewed by E&E, also suggests that SQN's motives could play a role in the ITC's upcoming decision.
GTM's Julia Pyper breaks down the price implications and the timeline ahead.
- Suniva asked the ITC to impose duties of 40 cents per watt on imported cells and set a floor price of 78 cents per watt on modules.
- The ITC will soon announce whether or not it will consider Suniva's request. If it does, the commission will have four months to decide if there's “injury.” If injury is found, the ITC will have another two months to suggest a remedy to the president.
- President Trump will have additional two months to determine what the remedy might be — he can either accept the commission's proposal, alter it, or determine the proposal is not appropriate.
Abigail Ross Hopper, CEO of the Solar Energy Industries Association, said in a recent call that the petition “poses an existential threat to the broad solar industry and its 260,000 American jobs.”
The motives of the claimant in this case and the non-representative nature of Suniva would seem to hurt SQN's chances with the trade commission. But trade and jobs are hot button items in this administration, and if that applies to the ITC, then this could be a highy politicized decision.