Lion drops Chinese solar plant investment plan

Lion drops Chinese solar plant investment plan

Shares in Lion Energy (ASX:LIO) fell by over a quarter on Wednesday as the company revealed it had called off a new investment in a Chinese solar energy plant.

Lion said it had been told the ASX would not grant it a waiver to the listing rule that would prevent it from paying cash in consideration for the proposed $6 million transaction.

The ASX will instead enforce a rule restricting companies from issuing anything but restricted securities to a substantial shareholder for “classified assets.”

The ASX informed Lion that it considered the shares to be acquired to be classified assets because their value cannot be determined.

The terms of Lion's agreement with Qinghai do not allow the payment to be made with restricted securities, so the deal can now not go ahead, Lion said.

This rule was only triggered because of a related rule on transactions involving substantial shareholders.

The company behind the plant, Qinghai First New Energy, is controlled by Yuda Chen, which holds a 10.58% stake in Lion Energy.

But Lion said Chen has never been a director, has no say in the decision making process of the company, and has a stake that is only marginally above the 10% substantial shareholder threshold.

The company added it will now seek alternative investment opportunities.

The transaction was to have been conducted by Lion subsidiary Lion Nanning.

LIO shares fell 26.19% in Wednesday's trading to $0.031.

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Tags energyASXbusiness dealsASX:LIOLion Energy

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