Canadian Solar Inc.
) announced that it has signed a financing agreement with
Deutsche Bank AG
). Per the agreement Deutsche Bank will provide $139 million in
non-recourse, short-term construction financing to Canadian Solar
for the construction of solar power projects in Ontario,
Canada. The loans are expected to be repaid with the
proceeds of the sale of the respective financed projects.
The loan facility is intended to support the simultaneous
construction of five utility-scale solar power plants totaling 49
MW AC. Developed by Canadian Solar, the projects are
expected to be built and connected through 2012 and 2013.
All of the projects have been awarded a 20-year power purchase
contract (the "FIT Contract") by the Ontario Power Authority
under Ontario's Feed- In-Tariff Program. As a part of Canadian
Solar's turnkey solar solutions, these projects will be acquired
Canadian Solar has systematically grown its project pipeline and
total solutions business over the past few years by leveraging
its brand, focusing on development of project infrastructure and
complementary support services. Its deep pockets help the company
to further accelerate development of its already robust project
pipeline. Recently, in the third quarter, the company
completed the sale of a utility-scale solar power plant to
Stonepeak Infrastructure Partners for $48.4 million. Subsequent
to the quarter, the company completed the sale of two more
projects, Brockville 1 and William Rutley, totaling 20MW (AC).
In recent times, Canadian Solar booked positive growth in Europe,
most notably Germany, which offset weaknesses in the U.S.
market. However, higher volumes were more than offset by
steadily falling average selling prices. Average selling prices
continued to decline as the Euro weakened and Germany
transitioned to a new, lower feed-in-tariff regime.
Looking forward, the company is actively branching out
aggressively to capture new opportunities in key solar markets
worldwide. The company continues to see attractive
opportunities for growth in China, Japan and India, as well as
other emerging markets in Asia, Africa and Latin America.
Moreover, its specialization at the downstream total solutions
business makes it a higher margin business.
However, in the near term, fortunes of Canadian Solar would be
impacted by the industry-wide oversupply glut leading to sharply
falling average selling prices, tepid module demand in Europe,
and rising competition in the market. Given the industry-wide
high inventory level, we do not foresee any short-term
improvement in margins of the company. The company presently
retains a short-term Zacks #4 Rank (Sell).
Canadian Solar Inc. is one of the world's largest solar
companies. As a leading vertically integrated provider of ingots,
wafers, solar cells, solar modules and other solar applications,
the company designs, manufactures and delivers solar products and
solar system solutions for on-grid and off-grid use to customers
With operations in North America, Europe, Australia and Asia,
Canadian Solar provides premium quality, cost-effective and
environmentally-friendly solar solutions to support global,
sustainable development. Over the longer run, we thus maintain
our Neutral recommendation on the stock.
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