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Ravi Sood (right) thcought Timminco’s technology couldn’t work. Eric Sprott (left) thought it couldn’t miss (Sean Sprague (left) and Tim O’Rourke (right) For Report on Business magazine)
Ravi Sood (right) thcought Timminco’s technology couldn’t work. Eric Sprott (left) thought it couldn’t miss (Sean Sprague (left) and Tim O’Rourke (right) For Report on Business magazine)

ROB Magazine

Timminco: How Eric Sprott got solar burn Add to ...

Fidelity Investments also booked big losses on its Timminco holdings. It declined to comment on Timminco.

Manuel Asensio continues to operate his firm Mill Rock, spending much of his time posting articles on a website he runs called the Alliance for Economic Stability. Asensio insists he never directly held a short position in Timminco shares but was compensated indirectly by others who were short the stock. He did, however, hold a short position in Sprott shares.

“We’re all flawed, we’re all greedy, we’re all willing to believe something that’s not real,” he said when asked to find meaning in the Timminco story. “The illusion of depending on regulators to protect your own interests, even as a big group such as equity investors, is something that you should not rely on. ...Almost biblical, huh?”

Ravi Sood’s life changed dramatically in the months after his first public confrontation with Timminco. As the manager of Lawrence Asset Management’s flagship hedge fund, he’d posted a smashing annual return of 75 per cent in 2006 and a return of 20 per cent the next year. But 2008 turned out very different. The fund sank amid the market crash and was hit with a wave of redemptions. In November, 2008, the Bank of Montreal called in a large loan, forcing Sood to blow out a number of positions in the heavily leveraged fund. In August, 2009, with Sood’s fund teetering on the brink, his mentor Jack Lawrence was killed in a plane crash. Amid mounting losses and investor redemptions, Sood was soon forced to sell what was left of the fund.

Today Sood is based in Hong Kong. He heads a gold company and another firm that operates a palm oil plantation in the Democratic Republic of Congo. Both companies are publicly traded (Sprott is a shareholder of both).

Even amid the very public meltdown of his investment funds, Sood said he was quietly pleased that he was able to hang on to most of his 1.6 million-share Timminco short position. While he had to pay back some when Timminco’s stock was trading at $8, he says that he covered more than a million shares when Timminco fell to 60 cents in 2010. It appears he made about $20-million. “It was buried under $250-million of other losses...but otherwise it was the best trade ever,” he said.

Timminco’s lawsuit against Sood, like the one against Asensio, appears to have been settled out of court.

In May, 2009, a $540-million class action lawsuit was filed on behalf of Timminco shareholders against the company and many of its executives, including Schimmelbusch, Spector and Boisvert. Michael Rogol, the author of the enthusiastic report on Timminco’s future, is also named in the suit, along with several former directors of Timminco. The proposed suit alleges that Timminco and certain executives made “public misrepresentations” that the company had a “proprietary metallurgical base process” that provided a “significant cost advantage” over other producers manufacturing solar grade silicon for solar cells. The suit claims that “the defendants have never been able to demonstrate that the company’s alleged proprietary process was more than a fabrication.”

None of the allegations has been proven in court–and they may never be aired. A series of court decisions, culminating in a Supreme Court of Canada ruling in early August, have held that the complainants have taken too long to secure leave from a judge for the lawsuit to proceed.

Q-Cells, once Timminco’s flagship customer, has fallen on hard times as the solar industry has been gutted. From a high of more than ¤97 in late 2007, the German company’s stock was trading hands at ¤0.10 in July of 2012.

Schimmelbusch and Spector are still based in Wayne, Pennsylvania. Schimmelbusch is still the top executive at AMG. The company’s stock, which traded above ¤62 in 2008, is valued by the market at less than ¤7 today. Schimmelbusch did not respond to interview requests for this story. Boisvert still works at the Bécancour plant; he also did not respond to interview requests.

Under a court-ordered process following its bankruptcy CCAA filing, Timminco’s assets were put up for sale. On June 15, 2012, a deal was finalized that saw a company called Globe Specialty Metals pay $31.9-million for everything but the idled solar-silicon operations in Bécancour.

Those operations, which were the catalyst for the firm’s onetime evaluation of more than $3.5-billion, were bought by the Spanish firm Grupo FerroAtlántica SA. The firm says it has developed a process to upgrade metallurgical silicon to purity levels high enough for use by the solar cell industry.

The sale price for Timminco’s solar business was a grand total of $2.7-million.

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  • Sprott Inc
  • Updated August 23 4:00 PM EDT. Delayed by at least 15 minutes.


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