Creditor raises concern about Sky Solar go-private offer

Hudson Sustainable Investments LLC, a US asset manager that is a creditor of Sky Solar Holdings Ltd (NASDAQ:SKYS), on Friday raised concerns about the possibility of the Hong Kong-based power producer accepting a recent go-private proposal.

As announced last week, a group of buyers made a non-binding proposal to take Sky Solar private in exchange for USD 0.30 (EUR 0.27) per share in cash and USD 6.00 per American Depositary Share (ADS), also in cash. Sky Solar said at the time that a previously-formed committee of independent directors would be evaluating the offer.

In a letter sent to Sky Solar through counsel Kasowitz Benson Torres, Hudson Sustainable notes that the company is a creditor of the solar power producer in the amount of about USD 97 million, exclusive of penalty and prejudgment interest, as well as attorney fees and costs to which Hudson is entitled. According to the latter, Sky Solar’s most recent financial statements do not reflect a liability of some USD 42 million owed to Hudson as guarantors’ portion of a yield maintenance amount, along with accrued default interest and expense reimbursements.

“Were the Yield Maintenance Amount alone taken into account, it appears that Sky Solar would in fact be insolvent. If that is indeed the case, then each of the directors of Sky Solar owes a fiduciary duty to Hudson to preserve Sky Solar’s assets for Hudson’s benefit,” the letter reads.

Hudson adds that it will hold the directors of Sky Solar liable for breach of fiduciary duty if the company executes a transaction that in any way diminishes the assets available to Sky Solar to satisfy its liabilities to Hudson. Any such transaction would also constitute a fraudulent conveyance under law, it notes.

Furthermore, Hudson says that Sky Solar has chosen not to disclose a higher offer by an affiliate of Hudson made some months ago, and expresses concern about Kirkland & Ellis serving as legal counsel to Sky Solar’s special committee.

“We find that appointment unusual, given that Kirkland & Ellis has represented, and continues to represent, Sky Solar in relation to the very liability which threatens Sky Solar’s solvency,” the letter adds.

Sky Solar develops, owns and operates solar parks, generating revenue through power sales. To date, the company has developed projects in Asia, Europe, South America and North America and as of end-December 2019 owned and operated 115.1 MW of solar plants.

(USD 1.0 = EUR 0.898)

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