LDK Solar Co. Ltd. (LDK), amidst its restructuring mode, clinched a large-scale contract for the delivery of solar modules to Thailand’s premier developer of photovoltaic (“PV’) projects, EA Solar Nakornsawan Co., Ltd.
Per the agreement, LDK Solar will supply a total of 63 megawatts ("MW') of PV modules to EA Solar and a weekly transport of 6.3 MW starting Aug, 2013.
Of late, the China based PV manufacturer has been struggling to manage its substantial debt burden and has defaulted in repaying to the holders of 4.75%, $23.7 million convertible senior notes due on Apr 15, 2013. The company partially compensated the loan.
Meanwhile, the company has been taking strategic steps to counter financial problems. At the start of first-quarter 2013, it signed an agreement to sell off its non-core Anhui assets for RMB 25 million (approximately $4.01 million). Next, it received a loan approval of RMB $440 million (around $69.8 million) from the China Development Bank and sold 17.0 million shares to Fulai Investment Limited.
Just recently, LDK Solar announced the sale of its entire equity interest in the 2.2 Gigawatt (:GW) solar cell manufacturing ancillary, LDK Solar High-Tech Co., Ltd. to an associate of Hefei City government, Hefei High Tech Industrial Development Social Service Corporation. The transaction was priced at RMB 120 million (roughly $19.4 million).
The U.S.’s imposition of countervailing duties (“CVD”) of 15.24% and anti-dumping duties (“AD”) of effectively 25.96%, has severely hit Chinese solar PV manufacturers, like LDK Solar, among others. Europe is also contemplating to operate the tariff policy, which if realized would prove harmful for the Chinese producers.
However, we believe the Thailand contract to be a major gain for the company in these hard times and will fetch sizeable returns. The Chinese government’s efforts to domestically promote its renewables would also offer encouraging prospects to LDK Solar.
Subsequent to the Fukushima plant disaster, China has shifted its focus on expanding its solar potential and plans to attain a target capacity of 21 GW and 50 GW by 2015 and 2020, respectively, which will create a huge domestic demand for the Chinese solar module manufacturers.
LDK Solar at present carries a Zacks Rank #3 (Hold). Other solar stocks performing well are STR Holdings, Inc. (STRI), Canadian Solar Inc. (CSIQ) and ReneSola Ltd (SOL), each with a Zacks Rank #2 (Buy).
Located in Xinyu City, LDK Solar and its subsidiaries are engaged in the design, development, manufacture, and marketing of photovoltaic products and development of power plant projects.
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