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American Superconductor Corporation Message Board

  • barrygeo barrygeo Jul 4, 2013 7:51 PM Flag

    sinovel says closing subsidiaries not related to lawsuit

    My posting this China Times article doesn't mean I believe it. It is worth noting that Sinovel had been busy closing other foreign operations prior to this. But the timing of closing the U.S. and European ops is suspicious.

    cut and pasted:

    Foreign unit closures unrelated to US indictment: Sinovel Wind
    Staff Reporter 2013-07-04 15:57 (GMT+8)

    Sinovel Wind Group, a Chinese wind turbine maker, said in a statement that it has closed four international subsidies, giving rise to speculation that the firm is cutting costs after it was charged with stealing trade secrets from its former US supplier, reports Shanghai's National Business Daily.

    However, Wang Wen, a spokesperson for the Beijing-based Sinovel, said the closures had little to do with the company's legal problems and more to do with the company's strategic adjustments.

    The closed units are based in the US, Belgium, Italy and Canada, the paper said. The closure of the four international subsidiaries means that Sinovel has shut down a total of eight overseas subsidiaries since April this year, leaving only its subsidiaries in Spain and Turkey.

    According to Sinovel's 2012 financial statement, the Spanish subsidiary reported 119 million yuan (US$19 million) in total assets, with 14.8 million yuan (US$2.4 million) in net losses. The Turkish subsidiary, which is built on a smaller scale than its Spanish counterpart, posted 720,000 yuan (US$117,400) in total assets and 84,700 yuan (US$13,800) in net losses.

    Analyst Wang Xiaokun said that if Sinovel had not terminated operations at the four overseas subsidiaries, it would have only expanded its losses, adding that the company's global expansion faltered due to its reliance on foreign technology, the National Business Daily said.

    US prosecutors secured an indictment of the company and two of its executives in a federal court in Madison in Wisconsin...

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    • Closing the foreign subsidiaries has more to do with the fact that the US actions taken by the Justice Department essentially make it impossible for Sinovel to do business abroad in all of the valuable markets that one might want to do business. It is not about repatriating assets as Sinovel is taking a 100% loss on these assets anyway. Whether they were seized or not by the US would make zero difference. A 100% loss is a 100% loss. The move only reflects what Sinovel thinks it can do business wise in the affected markets and is not a move designed to confer financial protection. I do not think Sinovel's intention is to settle at this point but they are running out of option quickly. The very best thing they could do business wise is to settle with AMSC in China and try to negotiate a cease fire so to speak from the US Justice Department as part of that settlement. The moves by the US only increase Sinovel's angst as it potentially could upset other Chinese investment in US assets that are far more valuable to China long term. One can speculate that any support from the State as well as the remaining investment community in China will evaporate quickly if the US starts blocking things like the acquisition of land and other assets (particularly agricultural ones). Further, any actions taken by US companies pulling out of China and thus harming employment will have an equal affect. I have now more confidence than ever that Sinovel will be forced one way or the other to pay up big for what thy have done. The Chinese are not stupid enough to risk much bigger pies over $1.2 Billion. My family has lost plenty in this debacle so far as our average weighted price is over $18 for a large number of shares so I am definitely guilty of not playing the events of the last couple of years correctly in this stock. Still I would be shocked if in 5 years time if I have not profited from my investments in AMSC. China cannot afford to play hardball with the US over this.

      Sentiment: Strong Buy

      • 3 Replies to scaifem79
      • {I do not think Sinovel's intention is to settle at this point but they are running out of option quickly.}

        It would be kind of dumb for Sinovel to settle now with the Supreme Court in China in deliberation about jurisdiction for the two intellectual property rights cases and the cease and desist against Sinovel and Sinovel's power electronics partner.

        If the Cinese Supreme court rules that both of these cases go into arbitration instead of being heard in a court of Law, then there is no reason to settle. The arbitrators will dictate the outcome and presumably Sinovel will win and go on doing exactly what they are doing. This decision according to McGahn in the last CC said that the decision will come down "within months".

        Of course everyone outside of China wants the two intellectual cases to be heard in a Court of Law in China.

        AMSC has a lot more at stake in the intellectual property cases too. Yes, a monitary settlement of almost any size would get them out of their present finacial crisis, however a ceases and desist order and legitimacy from a favorable Chinese court ruling would bowlster amsc's future business prospects in China, IMO.

        Putting a relative value on these two possible paths; I would guess that a favorable ruling in a court of Law in China would 5 times more beneficial to amsc than a monitary arbitration "settlement" no matter how big.

        The difference in arbitration or court is immeasurably greater for the overall business world. Everyone will benefit far more if this case goes to trial in China than if there is a monitary ruling outside of Chinese courts or an "arbitrated settlement".

        The world, and especially the Green energy world, needs for this case to be resolved in a Chinese Court of Law and not in arbitration or settlement.

        Sentiment: Buy

      • Scaifem79, " I am definitely guilty of not playing the events of the last couple of years correctly in this stock..."

        Well intentioned people tend to place the blame on themselves before blaming anybody else, the losses are pretty large for most of the share holders of this company and we all hope things will turn around. As for not playing the events correctly, I would say that you played the events correctly, and in hindsight it is too easy to say what the answer/action should have been. No one could possibly see the future and what the outcome will look like, whatever decision you made at that time is highly likely the right decision given all the circumstances at that specific time. 2 years from now you may say I should have taken the 2 bucks and ran away or you may say I should have doubled down, does anyone know which answer is right one for today? No, no one knows!

      • Your openness and honesty are a breath of fresh air. But I predict the board trolls (too nice a word for them) will make you regret it. No good deed goes unpunished.

        To continue the discussion, I have two points. First, I was struck in the conference call by McGrahn's pleading tone that just one government contract (degaussing?) would restore viability. It seemed out of place, given the lack of government interest in AMSC. But a month later, the government's interest in AMSC is indisputable. Would Washington's negotiations with China be advanced by AMSC's bankruptcy? I doubt it, so I think the Federal case lowers the probability of bankruptcy and the rate of further dilution.

        Secondly, I think we Westerners mistakenly project our system's values onto the nature of Sinovel as a private company, within an industry, residing within a country known as China. The institutions of government, industry, law and competing companies have not developed as separate, independent actors, but are all part of one nationalist complex with ethnic, political, economic, industrial, military, foreign policy, financial and monetary dimensions.

        This means that any technology stolen by Sinovel has been or can be shared throughout China's wind industry. Western sanctions against the Sinovel entity are insignificant compared to possible sanctions against the Chinese wind industry. And sanctions against China's wind industry are trivial compared to possible consequences for other export industries. If our courts require China to sacrifice a pawn to AMSC in order to continue to rule world manufacturing, they will pay and massively in proportion to AMSC's market cap. But if our courts pretend that, unknown to China, a company named Sinovel did a bad thing for which the market has already punished them, then China Inc. will either refuse to pay based on hardship or declare Sinovel's bankruptcy and tell AMSC to try to get blood out of a stone.

        I expect the US will blink first.

    • They are repatriating their assets and cash before US authorities can seize them .... no intention of playing along with US court rendered decisions or judgments.

    • #$%$ do you expect them to say, they need a billion to settle law suit, they clearly got caught with their hand in cookie jar, no one will do business with thieves..

      Sentiment: Strong Buy

    • I think Sinovel is retrenching and is showing defiance

      • 1 Reply to fatmoose8
      • From one of the reports I read, I tend to agree. It said something about the way Sinovel colored it. It went something like the reason they are in trouble is because they did business with a foreign company.

        Of course this is not suprising coming from a company owned by the son of a former Primier of China. It is not surprising that Sinovel has an Atilla the Hun mentality.

        As Rush Limbaugh says; ........ How did anybody get wealthy prior to capitalism? They had to steal it. They had to commit crime. No, no. Seriously. They had to commit crime or steal it. Capitalism enabled people to get wealthy by providing services and doing things for other people. In socialism or communism, the only way you get rich is to steal it...............

        It was a flagrant act to try to get away with using the stolen software inside the USA. Of course they had no other option at this point besides letting the turbines go without trying since they were ordered before the break with amsc. I suspect that the FBI may have been waiting for them to try it. Now the indictment amounts to a cease and desist inside the USA and probably in Europe.

        The important case still involves the Chinese Court of Law. Their Supreme Court is still deliberating on whether or not a court of Law in China will hear the case or not. Sinovel is fighting tooth and nail to keep the two property rights cases out of the court of Law. It must be gut wrenching for China Inc. to imagine allowing foreigners to have any kind of property rights.

        They want to do business but they do not want anyone else to have any property rights.

        Sentiment: Buy

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