"Contrary to what some fatigued shareholders and shorts masquerading as concerned investors, I do think Sinovel litigation here and in China is not a waste of time"
The legal expenses going forward will be negligible or non-existent, because from here on out their lawyers are being paid on contingency. So it's not a waste of time at all in that light. Nothing to lose, possibly lots to gain (though I'm skeptical)
BK is not really an issue, in my opinion. It seems the company is unlikely to take on significant debt, and the little debt they are carrying can be easily serviced. The problem is ongoing dilution.
I think lock up expired a few days ago, but management indicated they won't be dumping it all immediately. Maybe over two quarters or so ???
I don't think they've indicated what they plan to do with the gain, i.e. if a special div is possibility. IMO investors' long term interest would be better served using the proceeds to repurchase more 7.00% notes.
Cut and paste the following into a google search to read the decision:
United States Court of Appeals
For the Seventh Circuit
Nos. 14-3013, 14-3105
I haven't read through it. The very last paragraph reads:
"The district court’s denial of Sinovel’s motion to quash service of process is not an appealable order under the collateral order doctrine. We thus DISMISS Sinovel’s appeal, No. 14-3013, for want of appellate jurisdiction. In No. 14-3105, we conclude that the requirements for issuance of a writ of mandamus have not been met, and so we DENY Sinovel’s petition."
All this means is that the case can move forward. It'll take years. The U.S. Justice system seems to be no faster than China's.
I still am of the opinion that Sinovel could ignore any penalty imposed by the U.S. because it would be difficult to enforce. An award from the Chinese courts or arbitration would bear fruit, but I doubt we will see that. Time will tell
Hi mikeandvicki, there's no censor among us and it's an open forum. I actually think your posts are thoughtful and well-worded, and it's obvious you are an intelligent person. But that doesn't automatically mean that I believe your argument is based on solid points.
Your comment about me "pretending" is well deserved since my last response to you was blunt and rude. A lot of us are pretenders here in that we're trying to figure out what's going on. I ain't no expert on amsc, and if I or anyone else seems to try to present themselves as a know-all, don't believe them.
When I argued against your notion that Sinovel's "...more recent problems also find their origins in AMSC" I offered you a source that confirms much of what I posted. I also invite you to take any single or multiple sentences that I wrote in that message and ask me to provide you with a source to confirm what I said is accurate. I can probably do it.
lafeet, Huaneng Renewables is the parent company. I think they assign various subsidiaries to run their many wind farms.
An Oct 2014 Windpower Monthly article states that: "Sinovel is being sued by 12 subsidiaries of Huaneng Renewables in the Beijing No.1 Intermediate People's Court over an alleged breaking of contracts. The companies, led by Huaneng Fuxin Wind Power ..."
My understanding is that Huaneng Renewables itself was recently spun off from the state-sponsored China Huaneng Group, which is China's largest power producer. So Huangeng Renewables must be a very large wind operator. If you cut and paste the following into a google search you'll see a long list of Huaneng Renewables subsidiaries:
Huaneng Tongliao Wind Power Company Limited
What interested me most were the points dealing with the software and source code, particularly number 7, where Huaneng promises " ... not to provide any third party with any technical data relating to the control system software and source code supplied by Sinovel and, without the consent of Sinovel, not to modify such
technical data on its own"
end quote. In a way, this is just Sinovel protecting what they believe is their proprietary information. But, Is this the very same source code that amsc accuses Sinovel of having hijacked? What happens if amsc demands information from Huaneng about the software and source code being used, as evidence in a court case?
Sinovel's position in the Chinese court cases is that the source code was Sinovel's property all along, according to their contract with amsc. So, regardless of how they obtained it, they were only obtaining their rightful property.
Apparently, one lower court in China has sided with Sinovel on that point, though amsc has appealed.
The last part. Aside from the fixes for amsc's electrical controls, there were problems with gear boxes (I guess either Fuhrlander design faults or Sinovel manufacturing faults):
9. The Company shall within 30 days after the execution of the Settlement Agreement return all
the goods and materials that Sinovel left over on the project sites of the Company’s subsidiaries
according to the checklist(s) confirmed under the Settlement Agreement.
10. Sinovel agrees that all the spare parts and components stored at the joint warehouse of the
relevant subsidiary of the Company shall belong to the relevant subsidiary of the Company. The
relevant subsidiary of the Company will no longer claim from Sinovel any spare parts or
components or special tools or devices as agreed in the Contracts.
11. The Company shall return a total of 4 broken gear wheel boxes to Sinovel within 30 days after
the execution of the Settlement Agreement, and return a total of 16 broken gear wheel boxes to
Sinovel within 365 days after the execution of the Settlement Agreement.
Here's some more of the settlement. Mention of the software and source code is interesting for obvious reasons:
4. Within 90 days after the execution of the Settlement Agreement, Sinovel shall upgrade the main
control system of the equipment under the Contracts, remove the time limit logic from the
system and promptly provide the relevant subsidiary of the Company with the latest edition of
the application software without time limit on use.
5. Within 30 days after the execution of the Settlement Agreement, Sinovel shall provide the
relevant subsidiary of the Company with a detailed list of the spare parts and components for
the equipment under the original contract.
6. Sinovel shall, within 10 working days at the request of the relevant subsidiary of the Company
in writing, cancel the correction of the sampling wind speeds of the wind speed and direction
sensor of the equipment.
7. Upon termination of the Contracts, the relevant subsidiary of the Company warrants not to
provide any third party with any technical data relating to the control system software and
source code supplied by Sinovel and, without the consent of Sinovel, not to modify such
technical data on its own.
A bunch of wordy baloney. You came here knowing next to nothing about Sinovel and pretend to now be an expert.
Just being honest with you. I hope you do well in all your investments.
I think we understand each other fine, mikeandvicki. You believed there was a connection between "obey rules" in the manifesto and the lawsuits. I argued against one or two points of your logic. You probably entertained hopes that the manifesto indicated a favorable outcome may be coming in the lawsuits. I hope the info I've provided has made you rethink that.
If not ... well, I tried.
best of luck
For an interesting read, google the following:
announcement on status of civil action – HKExnews
cut and pasted:
On 22 July 2015, the Company, on behalf of its relevant subsidiaries, entered into a Settlement Agreement in relation to the Quality Assurance for the Wind Turbine Generation Units (the “Settlement Agreement”) with Sinovel, and the settlement was entered into during mediation procedure in the court. Major terms of the settlement are as follows:
1. The parties confirm that the remaining contract price of the Wind Turbine Generation Units Supply Contract(s) and its supplements (collectively as the “Contracts”) payable to Sinovel by the Company is approximately RMB1,050 million. Since the equipment supplied by Sinovel to the relevant subsidiaries of the Company under the Contracts has quality defects, Sinovel agrees to pay approximately RMB470 million as damages to the Company, which will be offset from the remaining contract price.
2. Sinovel must provide the Company with spare parts valuing RMB30 million in accordance with the terms of, and within 15 business days after the execution of the Settlement Agreement. - 1 - * For identification purpose only
end quote ... cont in next post
"... especially since all these more recent problems also find their origins in AMSC."
That's not true, mikeandvick. Sinovel started going downhill at the same time as the Chinese wind turbine market went through a very rough period. Wind farms were way overbuilt and the govt changed policy. After a massive power outage due to wind turbines with no LVRT capability, the govt ordered wind turbine oem's and wind operators to upgrade at their own cost. Meanwhile, a ridiculous percentage of installed turbines were idle because China's grid infrastructure had lagged behind wind installations.
Sinovel went downhill at the same as other Chinese wind turbine manufacturers such as Goldwind and Ming Yang. You looked a the downfall of Sinovel's stock, compared it amsc's downfall, and assumed it was a simple and direct relationship. Well, compare Ming Yang (MY) and Sinovel, and you'll see that Ming Yang crashed at the same time as Sinovel, and just about as hard.
The crash in Sinovel's stock, concurrently with other Chinese wind companies, was due to specific market conditions in China. If the amsc lawsuits played any role, it was secondary and minimal.
The wind crisis in China ran it's course. The market there has now reawakened and there is an emphasis on quality. The cards were shuffled. Sinovel lost its leadership position. It was because they tried to do too much too fast at the expense of quality. The company is trying to reinvent itself with an emphasis on quality.
There are several articles you can find to familiarize yourself with the history. A good one to start, google the following:
Post-Boom Blowdown for Wind Energy’s Sinovel
I just read the manifesto. It is a rather lengthy description of how Sinovel got out of it's debt problems and has supposedly seen a turnaround in business lately, along with a specific, detailed description of the company's strategy going forward. The quote you provide is a single, short paragraph at the end, perhaps it is 2 percent of the text.
You are certainly reading a lot of nonsense into that little paragraph. This is just corporate pr directed at shareholders and customers in their market
Sinovel has had some well-publicized quality issues within China. Any reference Sinovel makes to "quality" in its public relations is probably an effort to restore confidence to its present and potential customers. And the description of their fiscal turnaround and forward strategy is probably for the benefit of shareholders.
As to the two words "obey rules" that so intrigue you, it is likely an artifact of the awkwardness of translation. The entire English-version of the website does not read very smoothly and naturally to the American born English speaker.. Even the word "manifesto" is out of place.
1500mw was mentioned. It's not very clear to me exactly over what time period. Google the following:
Sector seeing investments, eyeing 1500MW orders: Inox Wind
... in the meantime ... it's taking longer than I'd anticipated for Inox's next contract with amsc. Hope all is well there.
Hi rip, thanks for the info. The legal cases are a waste of time, in my opinion.
I'm not sure what's going on, but a while back Windpower Monthly reported that ...
"Several weeks ago, Sinovel also announced that it has received a written notification from the Beijing Intermediate People's Court informing it that AMSC had requested a change to the allegations it was making."
So, just a guess, but maybe amsc asked to withdraw their former claims to make new ones. (what a bluster)
At any rate, I've always said here that I didn't think amsc was likely to get anything out of the chinese courts, and the case in the U.S. is meaningless, because sinovel could ignore a ruling against them and the u.s. would have no way to enforce it.
I bought the stock for other reasons.
Not much though. It only brought my 7.70 ave down to 7.30.
My timing was not good on my previous larger purchases, and although I could go hog wild and double or triple down, my better judgement tells me not to.
My investment here is large enough to hurt me if it continues to tank, but not large enough to kill me. I'll just leave it where it's at and see what happens.
I always live to fight another day. glta
$1 billion is peanuts to what private banks have pledged to finance wind in India. Cut and pasted:
Indian Banks Set $57 Billion Green Lending Targets By 2022
March 23rd, 2015 by Anand Upadhyay
Citigroup had recently announced plans to lend, invest, and facilitate deals worth $100 billion by 2025, to support projects that will fight climate change and protect the environment. While this might seem to be a lofty target, the company had previously set a goal of $50 billion for similar initiatives in 2007, and was able to achieve it in 2013, three years ahead of the schedule.
What's more, the $1B line of credit offered by the U.S. export-import bank was apparently not being used anyway, and was unlikely to be tapped in the future due to its high interest rate:
"The credit line for India didn’t gain traction in India partly because it was expensive and because it was routed thorough Ireda, Kapoor said.
The cost of the loan was expensive because it was routed through Ireda, which added in a hedging fee to offset the currency risk it would assume under the terms of the deal, Kapoor said."
Prepays generate dead cash and make it harder to achieve the 1.4B porfolio growth goal which you mentioned, icon. You argue they could use the cash from prepays to help sustain the dividend, but this is like stealing from future shareholders in order to make present shareholders happy. It would erode NAV.
Why have a secondary to raise more cash to grow the loan portfolio, only to take cash from prepays and distribute it to shareholders?
The dividend has to be sustained by healthy interest income. And I agree with you that if they achieve their portfolio goal the div is safe. But prepays are counter to that goal. They do "hurt."
In my original post I meant to say there could be div cut next year, not this year. Management has said they have plenty of spillover and proceeds from Box to sustain the dividend for the next two quarters.
I would not have bought shares if I thought a big div cut was possible. If it comes, my guess is modest, maybe .05 per qrt at most. Probably more like .02 or .03
High level of prepays has hurt them recentlly. At the same time, they've diluted with the secondary. So they need to reinvest all that in new loans to get the interest income back to historic levels on a per-share basis. That could be a difficult task, especially when they say will not compromise on their conservative lending standards.