LDK Solar Co., Ltd. (NYSE: LDK) shares may be surging higher, but at least one short seller sees problems ahead. Asensio noted accounting irregularities at the company after an employee accused the company of making misrepresentations on its accounting of inventories. LDK's most recent financial statements show questionable entries, including its "inventories to be processed beyond one year" numbers. The 87% jump in inventory and 828% increase in accounts receivables are also suspect.

Asensio also questioned today's press release stating that LDK signed a contract to supply 440MW of solar wafers to Hyundai Heavy Industries over a seven-year period, from 2009 to 2015. However, LDK's press release from February 22nd stated that LDK signed a contract to supply 450MW of wafers from late 2008 to 2015. The only differences between the two releases are slight changes in the start date and amount of wafers. Interestingly, there is no reference to the prior announcement and makes it look like a new contact.

Asensio ends by stating: "LDK investors with questions on the company's accounting will not find many answers in its quarterly releases. LDK continues not to release the standard financial statements expected of companies trading in the US. The company apparently does not feel compelled to create greater transparency for investors. LDK only issued quarterly statements in the form of a press release, and even then it did not bother to include a basic cash-flow statement."

Related Companies
Canadian Solar Inc. (CSIQ)
ReneSola Ltd. (SOL)
Trina Solar Limited (TSL)

Orange 21 Inc. (NDAQ: ORNG) shares are trading at a discount after a large holder made an offer to acquire the company in a Schedule 13D filing with the SEC. Costa Brava, a hedge fund that owns a 9.6% stake in the firm, offered to purchase the company's remaining shares for $3.90 per share, which represents a 6.8% premium over the current market price. The offer comes at a 30% premium, however, to the August 19th close, and also offers shareholders liquidity not available given the low trading volume.

The proposal is subject to performing satisfactory due diligence on the company and the execution of a mutually satisfactory definitive purchase agreement. Costa Brava indicated that they are available to start due diligence immediately and are prepared to conduct negotiations on a definitive purchase agreement in tandem with the due diligence. Notably, the purchase agreement would not be contingent on any financing, which gives it a higher probability of going through.

Orange 21 has yet to respond to the issues, but many shareholders are hoping that the process will move forward. Others are hoping that the company will hold out for a potentially higher offer that could give shareholders an even larger premium in the event of a buyout. However, it is uncertain whether or not Costa Brava would in fact issue a higher price. The risk of course is that they walk away from the merger and shares return to their $3.00 valuation.

Orange 21 Inc. designs, develops and markets products for the action sports, motorsports and youth lifestyle markets. The Company’s principal products, sunglasses and goggles, are marketed primarily under the brands, Spy and SpyOptic. These products target the action sport and power sports markets, including surfing, skateboarding, snowboarding, ski, motocross, and the youth lifestyle market within fashion, music and entertainment.

Related Companies
FGX International Holdings Limited (FGXI)
Shamir Optical Industry Ltd. (SHMR)

IKON Office Solutions, Inc. (NYSE: IKN) shares are up sharply this week after Steel Partners' Warren Lichtenstein got his wish. The office repair company finally agreed to sell itself to Japan-based Ricoh Co. Ltd. for $1.6 billion after being pressured by the activist hedge fund for some time. Officially, the $17.25 a share deal was the result of the company's "strategic planning process", but the pricing made it a huge win for its largest investor Steel Partners.

Steel Partners is one of the most aggressive hedge funds in the world with a tendency to force changes upon companies. The firm owns about 1/8th of Ikon and paid around $10.50 per share for its stake. That makes this latest deal worth $6.75 per share in profit, which is a healthy gain even when spread over a few years. The news also comes just after Steel Partners won control of Point Blank Solutions (OTC: PBSO) in a hostile takeover attempt.

IKON Office Solutions, Inc. (IKON) is an independent channel for document management systems and services. IKON integrates copiers, printers and multifunction product (MFP) technologies from manufacturers, such as Canon, Ricoh, Konica Minolta and HP, and document management software from companies like Captaris, Kofax, eCopy, EFI, EMC (Documentum) and others, to deliver solutions implemented and supported by its team of global services professionals.

Related Companies
Pitney Bowes Inc. (PBI)
Xerox Corporation (XRX)