HONG KONG: GCL-Poly Energy Holdings Ltd, a mainland co-generation plant operator, will buy a solar-cell parts maker in the country for HK$26.3 billion.

The company will purchase Zhongneng Polysilicon Technology Development Co, a supplier of polysilicon in Xuzhou, Jiangsu province, GCL-Poly announced yesterday.

Hong Kong-listed GCL-Poly will buy a 64-percent stake in the solar-cell parts maker with HK$19.9 billion by issuing new shares at HK$2.20 apiece and the remaining HK$6.4 billion will be made by cash payment and issuing notes.

The solar-cell parts maker is owned by Zhu Gongshan, who is also the chairman and controlling shareholder of GCL-Poly.

GCL-Poly shares held by the controlling shareholder will be increased to 56.17 percent on completion of the deal, from 34.47 percent.

The acquisition will facilitate "access to technology for large-scale renewable energy related operations," GCL-Poly said in a statement yesterday.

The company has 19 power plants mainly located in Jiangsu and Zhejiang province with an aggregate installed capacity of 1,050 megawatts by the end of 2008.

GCL-Poly's move falls in line with Beijing's plans to facilitate development in the solar energy sector. An earlier report disclosed the country is to expand solar power capacity to 10 gigawatts by 2020, a fivefold increase, according to researchers at the National Development and Reform Commission.

Meanwhile, the Ministry of Housing and Urban-Rural Development is considering subsidy standards for the "solar power roof program", an energy-saving exercise by installing solar-energy facilities on roofs of buildings, sources said yesterday.

The mainland is heavily reliant on coal-fired power generation, which accounts for 70 percent of its electricity generation, while in the new energy sector only hydropower and windpower is comparatively reliable power sources, according to Anna Yu, energy analyst at Taifook Securities.

"The solar energy sector has focused on equipment manufacturing rather than power generation because solar energy is subject to climate conditions and technically demanding," Yu said.

Shares of GCL-Poly, whose price has more than tripled since the central government's announcement on solar project subsidies in March, soared 15 percent to close at HK$2.88 yesterday after the purchase announcement.

(HK Edition 06/24/2009 page4)