LDK Solar Co., Ltd. entered into an agreement to sell $31.1 million worth of its outstanding shares to Fulai Investments Limited. The company will divest its 12% stake which corresponds to Fulai’s buying of 17 million shares priced at $1.83 per share each.
The transaction is subject to the terms and conditions of the agreement involving a 180-days lock-up period from the closing date of the deal. The net proceeds from the sale of shares will be utilized for general corporate purposes.
LDK Solar seems to have resorted to a restructuring mode. It is buried deep in a $3.1 billion debt which drove the company to divest its loss making LDK Anhui asset for RMB 25 million (approximately $4.02 million) to Shanghai Qianjiang Group.
Prior to the current agreement, LDK Solar finalized the divestment of a 19.9% stake to Hen Rui Xin Energy Co., Ltd. This involved selling shares worth $21.7 million.
The trade barriers adopted by the U.S. which includes countervailing duties ("CVD") of 15.24% and anti-dumping duties ("AD") of effectively 25.96% are expected to take a toll on LDK Solar’s businesses in North America. This is evident from the Chinese company’s modest fourth quarter wafer shipments expected in the range of 200 megawatt ("MW") to 250 MW with cells and module shipments in the band of 50 MW-80 MW.
Other solar players also facing tariff headwinds in the U.S. are JA Solar Holdings Co., Ltd (JASO - Analyst Report), JinkoSolar Holding Co., Ltd (JKS - Snapshot Report) and ReneSola Ltd. (SOL - Analyst Report).
Europe might also follow suit in terms of levying tariff duties on solar panels which if implemented could have an undesirable impact on LDK’s export business. Rumors about this led the company to pull back from a wafer supply agreement with a Europe-based photovoltaic customer.
However, LDK Solar is anticipated to offset these headwinds by reverting to the domestic market which is once again showing visible growth signs. The Chinese government recently upped its targeted solar energy capacity to 21 Gigawatt by 2015, reflecting a sharp 40% surge from 2012 goals.
Additionally, the government proposed the offering of subsidies to solar projects. Free grid connection to PV distribution programs is another factor that will work in favor of LDK Solar. Reflecting these broad fundamentals, the company presently retains a Zacks Rank #3 (Hold).
Based in Xinyu City China, LDK Solar and its subsidiaries are engaged in the design, development, manufacture, and marketing of photovoltaic ("PV") products; and development of power plant projects.