China Sunergy Co., Ltd. (CSUN)
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China Sunergy Co., Ltd. (CSUN) 20-F Annual and transition report of foreign private issuers pursuant to sections 13 or 15(d) Filed on 06/09/2008 Filed Period 12/31/2007 Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 20-F (Mark One) ¨ Registration statement pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of 1934 or x Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 2007. or ¨ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to or ¨ Shell company report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of event requiring this shell company report Commission file number: 001-33433 CHINA SUNERGY CO., LTD. (Exact name of Registrant as specified in its charter) N/A (Translation of Registrant's name into English) Cayman Islands (Jurisdiction of incorporation or organization) No. 123 Focheng West Road Jiangning Economic & Technical Development Zone Nanjing, Jiangsu 211100, People's Republic of China (Address of principal executive offices) Ruennsheng Allen Wang, (86 25) 5276 6890, [email protected], No. 123 Focheng West Road Jiangning Economic & Technical Development Zone Nanjing, Jiangsu 211100, People's Republic of China (Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person) Securities registered or to be registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered American Depositary Shares, each representing Nasdaq Global Market six ordinary shares, par value US$0.0001 per share Securities registered or to be registered pursuant to Section 12(g) of the Act: None (Title of Class) Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None (Title of Class) Indicate the number of outstanding shares of each of the Issuer's classes of capital or common stock as of the close of the period covered by the annual report. 237,332,777 ordinary shares, par value US$0.0001 per share, as of December 31, 2007. Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ¨ No x Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer x Indicate by check mark which basis of accounting the registrant has been to prepare the financial statements included in this filing: U.S. GAAP x International Financial Reporting Standards as issued by the International Accounting Standards Board ¨ Other ¨ Indicate by check mark which financial statement item the registrant has elected to follow: Item 17 ¨ Item 18 x If "other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 ¨ Item 18 ¨ If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x (APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS) Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ¨ No ¨ Table of Contents TABLE OF CONTENTS INTRODUCTION 1 I. PART I 3 ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS 3 ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE 3 ITEM 3. KEY INFORMATION 3 ITEM 4. INFORMATION ON THE COMPANY 28 ITEM 4A. UNRESOLVED STAFF COMMENTS 40 ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS 40 ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES 60 ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS 69 ITEM 8. FINANCIAL INFORMATION 75 ITEM 9. THE OFFER AND LISTING 76 ITEM 10. ADDITIONAL INFORMATION 77 ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 83 ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES 84 II. PART II 85 ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES 85 ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS 85 ITEM 15. CONTROLS AND PROCEDURES 85 ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT 86 ITEM 16B. CODE OF ETHICS 86 ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES 86 ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES 87 ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS 87 III. PART III 88 ITEM 17. FINANCIAL STATEMENTS 88 ITEM 18. FINANCIAL STATEMENTS 88 ITEM 19. EXHIBITS 88 Table of Contents INTRODUCTION In this annual report, except where the context otherwise requires and for purposes of this annual report only: • "we," "us," "our company," "our," "Sunergy" and "China Sunergy" refer to China Sunergy Co., Ltd., its predecessor entities and its subsidiaries; • "shares" or "ordinary shares" refers to our ordinary shares, "ADSs" refers to our American depositary shares, each of which represents six ordinary shares, and "ADRs" refers to the American depositary receipts that evidence our ADSs; • "China" or "PRC" refers to the People's Republic of China, excluding, for the purposes of this report, the Hong Kong Special Administrative Region, the Macau Special Administrative Region and Taiwan; • "RMB" or "Renminbi" refers to the legal currency of China; "$" or "U.S. dollars" refers to the legal currency of the United States; and "Euro" or "€" refers to the legal currency of the European Union; • "original equipment manufacturing" or "OEM" refers to arrangements under which we process silicon wafers provided by our customers into solar cells and charge processing fees from these customers; • "passivated emitter and rear cell" refers to a solar cell which uses oxide on its front and rear surfaces, and of which the rear surface is contacted by metal only at certain regions; • "selective emitter cell" refers to a solar cell where the regions under the front metal contact and the rest of the front surface areas are separately diffused and optimized; and • when calculating our manufacturing or production capacity of solar cells, we have assumed that all production will be done using 156-millimeter monocrystalline silicon wafers, even though we currently use and expect to continue to use a mixture of monocrystalline and multicrystalline silicon wafers, each in sizes of 125-millimeter and 156-millimeter; to the extent we use smaller wafers or multicrystalline wafers, our actual production will be less than our capacity. Our financial statements are expressed in the U.S. dollar, which is our reporting and functional currency. However, a majority of the revenues and expenses of our consolidated operating subsidiary is denominated in Renminbi. With respect to amounts not recorded in our consolidated financial statements included elsewhere in this report, all translations from Renminbi to U.S. dollars were made at the noon buying rate in the City of New York for cable transfers in Renminbi per U.S. dollar as certified for customs purposes by the Federal Reserve Bank of New York. Unless otherwise noted, all translations from Renminbi to U.S. dollars have been made at a rate of RMB7.2946 to US$1.00, the noon buying rate in effect as of December 31, 2007. We make no representation that any Renminbi or U.S. dollar amounts could have been, or could be, converted to U.S. dollars or Renminbi, at any particular rate, or at all. On June 5, 2008 the noon buying rate was RMB6.9460 to US$1.00. This annual report on Form 20-F includes our audited consolidated statements of operations for the years ended December 31, 2005, 2006 and 2007, and consolidated balance sheets as of December 31, 2005, 2006 and 2007. We completed our initial public offering of 9,775,000 ADSs on May 22, 2007. On May 17, 2007, we listed our ADSs on the Nasdaq Global Market, or Nasdaq, under the symbol "CSUN." 1 Table of Contents FORWARD-LOOKING INFORMATION This annual report on Form 20-F contains statements of a forward-looking nature. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward- looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. Whenever you read a statement that is not simply a statement of historical fact (such as when we describe what we "believe," "expect" or "anticipate" will occur, and other similar statements), you must remember that our expectations may not be correct, even though we believe that they are reasonable.