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.
JA Solar Holdings Co., Ltd
JinkoSolar Holding Co., Ltd
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
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