Chinese banks bail out LDK to the tune of USD 256 million

LDK's Mahong polysilicon plant
LDK says that it will use the funds to expand its polysilicon, wafer, PV cell and module production (LDK)

Troubled wafer and solar photovoltaic (PV) module maker LDK Solar Co. Ltd. (Xinyu City, China) appears to have secured a financial lifeline in the form of a USD 256 million credit facility from a syndicate of 11 Chinese banks.

The facility was secured through subsidiary Jiangxi LDK Solar Hi-Tech Co. Ltd. (Xinyu City, China), and use of the proceeds will be limited to financing LDK's operations within Jiangxi Province. LDK has already drawn down the first USD 33 million through the deal.

“While we are beginning to experience improvements in our business operations, we believe this discretionary loan facility will provide LDK Solar with the necessary support to ramp up our manufacturing operations of polysilicon, wafers, cells and modules in Jiangxi Province when business circumstances so permit,” stated LDK Solar President and CEO Sam Tong.

“When the global solar industry regains strength, we are committed to taking advantage of new opportunities that emerge.”


Loans may not be used to repay debt

The credit facility may not be used to service any of LDK's massive debt burden, either domestic or foreign. At the end of the second quarter of 2013 the company reported USD 2.39 billion in short-term borrowings, after nine consecutive quarters of heavy losses, and had fallen below USD 85.1 million in cash and equivalents.

Additionally, LDK has been failing to make payments on its bonds. The company recently entered a second forbearance agreement on an interested payment due in August 2013 with holders of 2014 bonds, after defaulting on another series of bonds due in April 2013.


Facilities guaranteed by LDK subsidiaries

The credit facility and all associated loans will terminate no later than November 10th, 2016. Each draw-down from the facility will be at the discretion of the syndicate and will be subject to additional conditions, including early repayment.

The syndicate has appointed a working group to monitor the use of the funds, and the facility and its subsidiaries are guaranteed by four domestic LDK subsidiaries.

 

 

2013-11-22 | Courtesy: LDK Solar | solarserver.com © Heindl Server GmbH

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