Trading volume in shares of Timminco Ltd., the former market darling that once claimed it had developed a revolutionary process to produce solar-grade silicon metal, has surged over the last two days and prompted a slew of speculation as to who is dumping the stock.
Volume in the one-time high-flyer soared to more than 21.8 million shares on Thursday when the stock plunged from 64 cents to as low as 47 cents. On Friday, the trading volume was more than 19 million shares and the stock closed at 48 cents on the TSX.
Speculation on trading desks was that Sprott Asset Management, the fund manager that was once Timminco's biggest cheerleader before its solar business collapsed earlier this year, was finally heading for the exits and selling its stake.
Not so, says a source close to Sprott which, according to information provided by Bloomberg, still owns 11.8 million Timminco shares, or about 6 per cent, of the beleaguered Toronto company.
Instead, market sources said that Timminco's former solar cell-making customers, many of whom were forced to take the company's shares for repayment of deposits for cancelled solar-grade silicon metals contracts, were behind the selling.
For example, European solar cell maker Q-Cells SE, which agreed in March to accept 15.9 million Timminco shares in lieu of the repayment of €9.7-million from the Canadian company, is understood to be one the major seller of the stock.
"It is a company that received [Timminco]shares in lieu of payment," said one source familiar with the matter.
Q-Cells did not respond to an e-mailed request for comment.
Timminco was forced to cancel several contracts with solar cell makers last year when the market for solar grade silicon collapsed. Timminco finally shut down its solar grade silicon business in March. The solar grade silicon unit had been the key driver of a frenzy of interest in the stock in 2008 and 2009 that pushed the shares above $34 and once gave the company a $3.5-billion market value.
Q-Cells and any other former customers solar grade silicon customers believed to be involved in the selling over the past two days, received about 50 cents each for their Timminco shares.
In addition to the 15.9 million shares given to Q-Cells in March, Timminco issued 10 million shares to a customer in October, 2009. It also issued 3.6 million shares to a customer in May, 2009, and another 3.4 million shares to a customer in September of that year.