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Canadian Solar focusing on asset sales as it weighs takeover offer from CEO

Canadian Solar Inc. is working to sell off a portfolio of projects it built up in recent years when the solar panel manufacturer and power plant developer was laying the groundwork to launch a separate company to buy and operate its assets.

The Ontario-based company started backing away from plans to create a yieldco in May 2016 after the business structure, which was designed to help project developers recycle capital, fell out of favor with investors. It had 1,211 MW of operating solar power plants worldwide at the end of February, a majority of which are in the U.S. Another 2,000 MW of projects are in "late-stage" development.

"So, this year, you'll see us sell a lot of projects," Canadian Solar Chairman, President and CEO Xiaohua "Shawn" Qu said March 19 on an earnings conference call. "But moving into next year, we may not have that many projects to sell."

Canadian Solar expects that approximately 47% of 2018 revenues will come from the sale of power plants in the U.S., Japan, China and the U.K.

For the fourth quarter of 2017, Canadian Solar reported revenues of $1.11 billion, an increase of 66% over the year-earlier period. The company previously cut fourth-quarter revenue guidance by about 40% to between $1.04 billion and $1.08 billion because of delays in selling six solar power projects totaling 703 MW in California. It is still waiting for regulators to approve those sales.

In January, Canadian Solar said it hired advisers to help the company's board review a buy-out offer from Qu, who in late 2017 became the latest solar manufacturing boss to try to privatize his company. Shareholders of China-based JA Solar Holdings Co. Ltd. recently approved a takeover proposal from the company's executive chairman and CEO, Baofang Jin.

Canadian Solar shares were up about 6% in mid-afternoon trading March 19. Qu's cash offer valued the company at $18.47 per share.

The company expects 2018 revenues of $4.4 billion to $4.6 billion, compared to $3.39 billion in 2017. Shipments of solar modules are projected to increase to between 6,600 MW and 7,100 MW from a record 6,828 MW in 2017.

"While there may be turbulence in certain key markets such as the U.S. and India due to trade protectionism initiatives, we have seen demand from many new markets, such as [the] Middle East, Australia and Latin America," Qu said, adding that the company plans to selectively increase its manufacturing capacity and introduce higher-efficiency products "in order to meet market demand and maintain competitiveness."