Greentech Lead Asia: LDK Solar, a China based vertically integrated manufacturer of photovoltaic products, has entered into a share purchase agreement with Fulai Investments Limited.
Under this agreement, Fulai will purchase additional 25,000,000 newly issued ordinary shares of LDK Solar, at a purchase price of US$1.03 per share with an aggregate purchase price of US$25,750,000.
Fulai Investments has agreed to pay LDK Solar in two installments prior to the closing: the first in May for US$15,000,000 and the second in June for US$10,750,000. Fulai Investments also has the right to designate two non-executive directors to the LDK Solar board upon consummation of the transaction. The net proceeds will be used for general corporate purposes in LDK Solar’s operations.
LDK Solar defaulted a $24 million bond repayment last Tuesday. The company also reported loss for the seventh straight quarter.
LDK’s debt now totals $5.4 billion, according to China’s caijing.com. Most of this is owed to the Chinese Development Bank (CDB), which in September of 2010 approved an $8.9 billion five-year loan package for LDK Solar.
The company’s financial results for the year 2012 showed it has less than $100 million in cash and cash equivalent, $167 million in guaranteed bank deposits, and total asset of $646 million up for sale, a tiny sum next to 5.4 trillion in debts, caijing reported.
LDK Solar anticipates to offsetting these challenges by focusing on the Chinese domestic market which has bounced back after an economic slowdown. Additionally, the Chinese government’s proposed offering of subsidies to solar projects and free grid connection to PV distribution programs are factors that will work in favor of LDK Solar, experts say.