On the evening of February 25, PV equipment manufacturers Autowell and Jiejia Weichuang announced their respective capital increases in Runyang Co., Ltd. through a "debt-to-equity swap." Jiejia Weichuang subscribed to an 8.0899% equity stake in Runyang with 720 million yuan in debt, while Autowell subscribed to a 2.0225% equity stake with 180 million yuan in debt, valuing the target company at 8 billion yuan.

Regarding this matter, Runyang Co., Ltd. responded to a reporter from the "Sci-Tech Innovation Board Daily" on February 26, stating, "The capital increase by these two leading equipment companies is mainly due to the strengthened financial chain of Runyang following the capital injection by state-owned Yue Da Group. All bases have resumed production, and the US business is thriving. The overall market outlook for Runyang remains optimistic. The company's operations are normal, and Runyang has never given up on seeking a listing on the capital market."

Not long ago, on February 14, Tongwei Co., Ltd. announced the termination of its acquisition plan to purchase Runyang Co., Ltd. for 5 billion yuan. Regarding the termination, Tongwei stated that despite multiple rounds of detailed and comprehensive negotiations, some commercial terms had not been agreed upon as of now.

Comparing the terms of the capital increase, Tongwei's 5 billion yuan cash acquisition plan included strict performance commitments and integration requirements, while the "debt-to-equity swap" by Autowell and Jiejia Weichuang included "IPO gambling" clauses. Industry insiders analyzed that this reflects the two equipment manufacturers' focus on resolving short-term risks rather than competing for long-term control of Runyang.

From Tongwei's Failed Acquisition to the "Debt-to-Equity Swap" Capital Increase by Two Equipment Manufacturers

Runyang Co., Ltd.'s main business focuses on the R&D, production, and sales of high-efficiency solar products. In addition to solar cells, the company has extended its operations upstream and downstream in the PV industry chain. Upstream, it has a silicon metal capacity of 55,000 mt, a polysilicon capacity of 130,000 mt, a crystal pulling capacity of 7 GW, and a wafer slicing capacity of 10 GW. Downstream, it has a module capacity of 13 GW and has also ventured into some PV power station projects.

Previously, in August 2024, PV industry leader Tongwei Co., Ltd. announced plans to increase its stake in Runyang Co., Ltd. by no more than 5 billion yuan, aiming to acquire a controlling stake of no less than 51%. The transaction amount was the largest M&A deal in the PV industry in recent years. However, after six months of negotiations, Tongwei announced the termination of the transaction on February 14, citing "failure to reach agreement on certain commercial terms" as the main reason.

At that time, regarding the purpose of the acquisition, industry insiders mentioned that Tongwei might have valued Runyang's overseas capacity layout (e.g., bases in Thailand and Vietnam) and the channel advantages of its US market module brand "RUNERGY." However, market speculation suggested that Runyang Co., Ltd.'s 2024 performance pressures, combined with rumors of overseas factory shutdowns and patent litigation risks, led Tongwei to question the asset quality and synergy effects.

Compared to Tongwei Co., Ltd., whose main business overlaps significantly with Runyang, the capital increase participants Jiejia Weichuang and Autowell are downstream PV equipment manufacturers, forming upstream and downstream relationships in the industry chain.

A reporter from the "Sci-Tech Innovation Board Daily" noted that, unlike Tongwei Co., Ltd.'s acquisition aimed at gaining control, the two equipment manufacturers, Autowell and Jiejia Weichuang, both stated that the purpose of this debt-to-equity swap is to quickly resolve customer arrears, accelerate loan recovery, and strengthen cooperation with customers.

According to the announcement, the debts of Autowell and Jiejia Weichuang to Runyang Co., Ltd. originated from equipment sales. As of the end of 2024, Autowell's subsidiary had 180 million yuan in claims against Runyang and its subsidiaries, while Jiejia Weichuang's subsidiary had 720 million yuan in claims. After the capital increase, Runyang's actual controller, Longzhong Tao, saw his shareholding ratio drop to 28.96%, Yue Da Group held 17.98%, and based on the current shareholder list of Runyang Co., Ltd., Jiejia Weichuang and Autowell are estimated to become the fourth and seventh largest shareholders, respectively.

Industry insiders analyzed that this "debt-to-equity swap" strategy might be a "defensive" measure by the two equipment manufacturers during the industry's downturn and a "bet" on the survival capability of a core customer.

Amid widespread performance pressures in the PV industry, PV "shovel sellers" have shown resilience. Jiejia Weichuang forecasted its 2024 net profit attributable to shareholders to be between 2.3 billion and 3.1 billion yuan, up 40.8%-89.77% YoY. In the same year's first three quarters, Autowell achieved a net profit attributable to shareholders of 1.166 billion yuan, up 36.91% YoY.

However, as the overall market entered a reshuffling phase, midstream and downstream PV manufacturers still faced certain payment collection risks. From January to October 2024, Runyang Co., Ltd. achieved revenue of 12.289 billion yuan but incurred a net loss of 596 million yuan. In 2023, Runyang Co., Ltd.'s revenue and net profit were 26.313 billion yuan and 2.662 billion yuan, respectively.

However, Runyang Co., Ltd.'s net operating cash flow for January to October 2024 was not disclosed. Considering its net profit loss and total liabilities of 29.862 billion yuan (as of the end of October 2024), it is challenging for equipment manufacturers to recover payments through traditional collection methods. The "debt-to-equity swap" plan converts accounts receivable into equity, which, although not immediately liquid, can reduce bad debt provisions and optimize financial statements.

At the same time, the two equipment manufacturers aim to maintain customer relationships through equity ties. Runyang Co., Ltd. still has significant solar cell capacity and ranked among the top five globally in shipments in 2023, making it a major PV equipment purchaser. Industry insiders mentioned that if Runyang were to halt production due to a financial chain rupture, Autowell and Jiejia Weichuang would face the risk of losing orders. The "debt-to-equity swap" provides "blood transfusion" to prevent customer collapse and paves the way for future equipment sales.

Behind the IPO Gambling: Performance Pressures, Litigation Disputes, and Leadership Changes

According to the supplementary agreement mentioned in the announcement, Runyang Co., Ltd. must complete an A-share listing or be acquired within five years. Otherwise, its actual controller, Longzhong Tao, and Jiangsu Yue Da Group Co., Ltd. must repurchase the equity.

Reviewing Runyang Co., Ltd.'s listing journey, in March 2022, its ChiNext IPO application was accepted by the Shenzhen Stock Exchange and successfully passed the review in November of the same year. At that time, Runyang Co., Ltd. experienced explosive growth in performance during the PV industry's upward cycle, with revenue increasing from 3.026 billion yuan in 2019 to 10.617 billion yuan in 2021, and doubling again to 22.038 billion yuan in 2022. During the same period, net profit reached 2.057 billion yuan.

With the surge in performance, Runyang Co., Ltd. set a 4 billion yuan IPO fundraising target. More than six months after passing the review, in June 2023, Runyang Co., Ltd. submitted its registration, which became effective in the same month. However, a year later, the registration approval automatically expired, and Runyang Co., Ltd. still failed to go public as planned.

Subsequently, its performance and shipment volume both "changed dramatically." From January to October 2024, Runyang Co., Ltd. achieved revenue of 12.289 billion yuan but incurred a net loss of 596 million yuan. After ranking third globally in solar cell shipments for three consecutive years, Runyang Co., Ltd. fell to fifth place in 2023 and dropped out of the top five by 2024.

During the PV industry's downward cycle, Runyang Co., Ltd. faces more challenging issues. In May and September 2024, TrinaSolar filed two lawsuits against Runyang Co., Ltd. in US courts over patent infringement, and the cases are still under trial. If TrinaSolar wins, Runyang Co., Ltd. may face the risk of being unable to produce and sell in the US, further eroding its overseas advantages.

Meanwhile, Runyang Co., Ltd. is undergoing internal personnel changes. After Tongwei terminated its capital increase, the company's general manager, Jun Tang, was reported to have resigned. Following Yue Da Group's 1 billion yuan capital increase in September 2024, Runyang Co., Ltd.'s senior management underwent changes. According to Tianyancha, on September 28 of that year, the company's chairman was changed from founder Longzhong Tao to Yue Da Group's Party Secretary and Chairman, Naiwen Zhang. Longzhong Tao transitioned to the roles of director and general manager, forming a "dual general manager" structure with former general manager Jun Tang. Industry insiders generally believe that this personnel adjustment was an inevitable move.

The "Sci-Tech Innovation Board Daily" will continue to monitor the future development of Runyang Co., Ltd.